2011. BBC Worldwide completes the sale of BBC Magazines for a reported £121m. The portfolio is sold to Exponent Private Equity, through which the Immediate Media Co. is born. Pulling in further titles from other publishers, the newly created UK publishing house is responsible for 34 websites, 50 magazine titles, and a staff of around 750 people. It was an acquisition of legacy media brands that was seen at the time as a bold one, by an industry witnessing the growth of social media and the decline of traditional print circulations.
Fast forward five years, and at the beginning of 2017 we see another sell, this time the acquisition of Immediate Media by Hurbert Burda Media, the Munich-based global media and technology company. It was an interestingly timed deal within a European market still coming to terms with a United Kingdom preparing to leave the EU. More interesting still from an industry point of view, was that Paul-Bernhard Kallen, chief executive of the privately held Burda group, felt that the acquisition provided an opportunity to use strong print publications to protect overall revenues against an increasingly uncertain digital advertising ecosystem that he admitted was “all going to Facebook and Google”.
When McIlheney sat down with Bureau at the PPA Festival in London earlier this month, he began by asking him what the new company set-up would look like, and if the CEO could confirm publicly whether he would be staying on in his current role:
“I am staying on and when we announced the acquisition that was one of the first things we talked about,” said Tom Bureau, CEO of Immediate Media. “Burda is an extremely interesting business with around 13,000 employees and a 2.5M € turnover. It’s also very decentralised with 38 different profit centres around the world. So a lot of the time they look for entrepreneurial teams and it’s a lot less interventionist than some other options may have been. From their point of view looking at Immediate, private equity moves generally take into consideration three separate elements: 1. Cash flow to leverage the business; 2. Profitability and emphasis on growing that profitability; 3. Quality of earnings and potential for high multipliers and high profits. So their strategy is very much to say what’s your strategy? And then let you lead with the plan.”
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The 2011 acquisition of BBC Magazines and accompanying set-up of the Immediate Media Company became an instant talking point within the industry. Here you had a solid set of legacy print titles with a strong consumer readership, but at a time of increasing unease with regard to declining print circulations and a short-fall in digital ad-revenues to make up for them.
“One of the things this business does well is building revenue streams, and that is possible to do especially if you have strong subscription models, which we do. If you go back to when BBC Magazines was being sold, a lot of people looked at that portfolio, saw the value, but then ended up getting cold feet for whatever reasons. We just looked at it and thought ‘this is unbelievable’. There were fantastic special interest brands, including the Radio Times, Gardeners World, the Children’s business, BBC History, etc., and this provided great legacy brands with huge potential opportunities to monetise. Plus there was the fact that both politically and commercially, it made sense at that time for BBC Worldwide to relinquish that side of the business, and of course with not that many suitors competing in the end it meant that we could get it for a fair price.”
The jewel in the crown of the Immediate portfolio is undoubtedly the Radio Times, which was the biggest-selling magazine in the UK with a peak weekly circulation of 8.8m. Bureau sees strong potential for future growth with the Radio Times, and he highlights what an often undervalued product it is within the publishing world.
“The Radio Times was an unbelievably under-commercialised asset. And even actually at that time under-priced. It was selling for £1.20 – it’s now £2.30, and it could be even more than that to be honest. And of course the interesting thing with that is, once you start to raise the cover price you can also raise subscriptions, so we’ve been able to ramp up the subs price as well. I remember going into pitch to a bunch of bankers with a big bag of tricks at one point, to demonstrate the value of the Radio Times. I had a beer, a glass of wine, a dog biscuit, all of these things were twice the price of the magazine. We have a very small advertising business and it’s always been that way, so we’re always focused on the value of the overall offering to the reader.”
It’s been a unique and seemingly swift journey from the purchase to the sale of what was once known as the BBC Magazines portfolio. But for Bureau, Immediate enters the relationship with its new owners as a practically unidentifiable company from the one it began as back in 2011.
“When we look at the business that we bought and the beginning of the journey in late 2011, we have undoubtedly sold a radically different business to the one we acquired. We’ve done an enormous amount including radically changing the employee talent base, introducing about 30 different launches during that time and 40 different digital projects. We’ve moved into ecommerce, digital market places, we own the wedding space in digital, and we have acquired other verticals that we didn’t have before. It’s a completely different and transformed business.”
The theme of cultural change is one that rings out strongly around the industry in 2017. FIPP recently interviewed Ilkka O. Lavas, publisher and senior partner for Finnish publishing house City Digital OY, about making the transition from legacy print publisher to global licensing play. We also recently reported on Bruce Daisley of Twitter’s views on successfully evolving company culture. For Bureau, who knew from the outset that the Immediate Media Company was taking popular legacy brands on a journey of robust change and evolution, cultural shift has been at the heart of the business plan.
“I think the culture was incredibly central to the business we are today and the growth we have incurred. When we started we had about 750 staff and now we have close to 1,400. From the beginning we had a focus on change management. We particularly wanted people around us in the business that would look outside and see opportunities. So we did a lot of change management. We initially hired 500 people and let 300 go. We have culture and people strategies right at the heart of what we do. It’s the people that are the difference.”
“Physically to implement this there are a range of things we do. Firstly, we understand that our employees are emotional beings, so it’s a case of understanding how they fit and where the business is going – communication of visions is hugely important. Then the role of leaders is absolutely crucial as well. Greg Dyke once told a great story about role modelling in leadership, how the leader is always being observed and that there is always a scorecard going on in the background. Every interaction you’re either getting a plus or a negative. And then it’s just a whole package around how we celebrate success, how we communicate with people, being firm but fair, being hard on issues but compassionate with people, and so on.”
Finally, Bureau talked about the importance of having strong brands and strong revenue streams, particularly at a time when publishers are increasingly beginning to realise that advertising revenues alone may not be enough to secure future growth.
“Strategically, one of the reasons we were excited about putting together BBC Magazines and the digital platform business, was that we understood that in today’s landscape a focus on special interest gives you both a really strong offensive and defensive position. TV listings, special interest areas, and Children’s are three high performing print sectors, so that gives us a strong base. Beyond that we really try to excite our people, really look at opportunities, and then invest in new products. We’ve also moved more into the transactional space, and pivoted slightly away from traditional advertising, although it does still have its place. About 15 per cent of our business is advertising, 85 per cent is selling content services.”
***Tom Bureau will be part of a panel discussion on rebooting organisations to embrace the future at the 41st FIPP World Congress in London, from 9-11 October 2017. You can currently register with our discounted Early Bird rate, here***
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