Thursday, August 25, 2005

Sun + House = Front-age

So, after building up a 15% share stake, ( MediaGuardian ; PressGazette ) Kelvin MacKenzie seems to be getting further involved with magazine publishers Highbury House TelegraphOnline . Apart from making some virtual money on the transaction – the price jumped after his stakeholding was announced, leaving him with a tidy profit – the question has to be ... why?
Some commentators think that he wants to turn his hand to a new challenge, others that he will try to force HH to sell him Front, the ladmag, so that he can pursue Nuts and Zoo to an (apparent) fortune. The latest theory seems to involve a convoluted business ploy which will allow him to take charge. ( Guardian )

So one answer might be "money". But Highbury House is not a well company. It has sold off its best titles to Future Publishing and it is about to downsize to Bournemouth – home of Paragon Publishing which it swallowed earlier. Since he is not buying into a thriving concern, what are the options for improvement? In essence, there are three ways to make money from a publishing house
o improve income;
o cut costs;
o raise the share price and sell out.

Improve Income
This means selling more copies and/or getting more paid advertising. In either case there must be a product which people want to read/buy and the more of them there are, or the better targeted they are, the more advertisers will want to advertise. As noted above, Highbury has already sold its best performers but there is one magazine left which other pundits have focused on – Front.
Front was launched as a junior Loaded (ie it was meant to be aimed at a younger readership) but it quickly became a full-on ladmag. However, it has never been a star performer, despite getting a television documentary to itself early in its life. In the latest ABCs ( ) it lies 7th in its market sector, behind FHM, Nuts, Zoo, Loaded, Men's Health, Maxim and GQ. Seventh is not bad, ahead of titles like Stuff, Esquire and Arena, but with an audited circulation of 88,154 it would have a hard time catching GQ (125,050), never mind FHM (560,167).
If the idea is to build the brand, it will take a long time and a lot of hard work. If the idea is to take it weekly (jumping on the Nuts and Zoo bandwagon), then it will take very deep pockets - each of those titles launched with an £8million budget. And quite frankly anyone who wanted to use that much money on a languishing brand like Front clearly deserves to lose it all.
Given Mr MacKenzie's track record, perhaps the idea is to launch a stable of dull, blokey magazines. This would be another difficult and expensive project given how crowded the market is already. Is Richard Desmond a mentor?

Cut Costs
Several former students of mine work at Highbury and I do not get the impression that it is a place which lashes out money left, right and centre. Are the directors rewarding themselves over generously? I don't know but I very much doubt that there is much to reward themselves with. There are always costs which can be cut but after a certain point the result becomes self-defeating as the best staff leave or are driven away. And if cuts drive down the quality of production so much that it begins to show in comparison with the opposition then that is also self-defeating.

Raise the share price and sell out
It is thought that Mr MacKenzie will act in concert with a venture capital firm. One of the few things I know about venture capitalists is that they are not in it for the long haul. Plus, the briefest brush with accountants shows there are many different ways of presenting figures to make them look better or worse.
The quickest way to "expand" a company is to buy up smaller or weaker companies – which is exactly what Highbury House did (and what Nexus Media did before becoming the backbone of Highbury, and what whoever sold Emap its massive kennel of pups in the USA did). It is possible that KM and associates will use the shell of Highbury to try this again.
Doubtless there are many other mysterious ways to add value to shares, and since the price/value is largely based on the confidence of investors the whole things becomes pretty subjective. This is an area for business bloggers to watch.

Newspapers, Radio and Magazines
There's no doubt that when he was editor of the Sun, MacKenzie hit the tabloid zeitgeist perfectly. But times have changed, he's no longer there and what has he done since? His foray into small scale tv was amusing, but hardly successful. His radio venture started well and TalkSport certainly developed a style of its own (downmarket, pretty dull despite its pseudo shock-jocks) but it was not quite successful enough to keep him in the job as boss of the Wireless Group. So Kelvin MacKenzie is looking for something to do, a large amount of cash jingling in his pockets.
Why not magazines? He knew nothing about tv or radio before venturing into those territories and I dare say that like many "print" (ie newspaper) journalists, he thinks that magazines are a piece of piss. I just hope he has talked to Eve Pollard, the last big name "print" journalist to try this path to publishing riches. She launched Aura, a magazine for older women, amid a buzz of self-hype and fatuous statements about massive gaps in the market and untapped advertising. It soon folded and none of her other ideas reached paper.
The thing is that most newspaper journalists have completely the wrong idea about magazines. They look at the lead times, at the publishing schedules, and decide that with all their 24-hour hyped up scoop-a-rama experience they can fill those pages in no time.
I was quite surprised recently to be told by a newspaper journalist (and quite a thoughtful one) that his new big idea was to think of the reader first . This was before Rupert Murdoch gave his latest internet-revelation speech and asked if papers were offering stories which people wanted to read, so he thought it was original.
The reason for my surprise was that as a magazine journalist I have been putting the reader first all my working life. Magazines are predicated on that; they owe their very existence to that. And on top of that, they need to have scoops, top stories and access to information which other titles don't have – but only as long as it is what the reader wants, or needs, to read.
TalkSport seemed to be trying to access the listener with its incessant phone ins, but the trouble with that was only dullards seemed to bother to call. There is a difference between running an asylum in a lunatic-centred way and letting the lunatics run the place.
There are still some very good magazine people at Highbury House (Sally O'Sullivan comes to mind) and if Kelvin MacKenzie is really going to get involved he would do well to seek them out and listen to them carefully – before carrying on in his own inimitable way.
Doubtless it will give us all a good laugh as he blusters his bad-tempered way to whatever outcome awaits. He is already said to be "furious" with the Highbury Board and we can only wait with bated breath for more Kelvinisms to make their way into the prints.


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