Suddenly the UK is flavour of the month for the Packer empire as the Big Fella punts on gaming, gambling and now magazines.
What is it about the Poms that the Packer family likes? Punting and gaming on cards and horses, corporately and personally, and now magazines. Of course there’s belting them at cricket and rugby league, so long as the Nine Network is telecasting the matches, with a nice little earner slipping through to Fox Sports from the ‘supply’ arrangement with Foxtel.
But Kerry Packer is about as Australian as you can get. No so CEO John Alexander, who is urbane and worldly, as readers of the Fairfax Good Weekend piece on him two weekends ago will have learned.
You could say JA is a modern businessman, almost stateless in outlook and appearance, a older version of the metrosexual, with a wide spread of tastes and interests, which makes the UK a more interesting market than Australia in some respects.
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But where’s nothing like a bit of gloss, and positive publicity to help the image. And now ACP, which is struggling with its Australian businesses which are becoming too lean, too mean and too slow in some respects, will spend $55 million to jump into the UK with ACP’s old buddies, the Hearst group of the US.
This will mean ACP has magazine businesses in the UK, as well as in Singapore and New Zealand. It also means PBL has clearly chosen to grow internationally in print after blowing more than $400 million in abortive TV joint ventures in India and smaller amounts elsewhere in Asia. That is, of course, in addition to gaming and gambling.
That means Packer has decided, or has been convinced, that his broadcast business in Australia will remain anchored here to a market bounded by Papua New Guinea and New Zealand.
It is less capital consuming (and after the Indian misadventure) less likely to lose lots of money if you joint venture with someone like Hearst, who ACP and the Packers already know and get on with.
Both empires were built by two media megalomaniacs, Frank Packer and William Randolph Hearst. But they were in history. ACP is still run by a man with megalomaniacal tendencies and his boss, Kerry Packer, while Hearst is now run by suits. Check out the announcement made by PBL and Nat Mags.
There’s a bit more information in the UK announcement, with the senior executive of Nat-Mags running the business like David Gardiner effectively runs ACP in Australia, despite being deputy CEO to Alexander.
That the Australian side was announced by Gardiner points to the higher role (but no title, yet). Colin Morrison will be the CEO, but the day to day operations will be run by Nat-Mag people, especially by Jessica Burley who will be the COO. She is a senior publisher in Nat-Mags women’s lifestyle area.
Colin Morrison is a former CEO of ACP, will run the ACP-Nat Mag venture. He’s been in the UK scouting for new titles in the past five months or so.
According to the Nat-Mag statement this is the third joint venture it has done with other publishers in the UK. So it is experienced in this area while ACP will be the ‘new chums’ on the block.
But together in Australia they have done well with Harpers Bazaar, the biggest magazine in this country by the number of pages (and probably ad pages and revenues as well) each time it appears. There’s also Cosmopolitan (the original magazine in the joint venture) and She magazine. Cosmo does well, but has lost the impetus it had say 20 years ago when it seemed adventurous, while She is targeted to fill a niche in the women’s market and nothing else.
The UK joint venture involves ACP buying a 50 per cent stage in Best, the title of Hearst’s National Magazine Company. It’s what ACP has done in the past with foreign publishers, acquire an interest in a title, learn about it and the market and then grow the business through brand extension, then move to a full joint venture and then perhaps a buyout of the partner if possible.
But clearly Australia’s too small for the Packer family’s ambitions in magazines. It has just under 50 per cent of the local magazine market and cannot grow any further. The period of rapid revenue and earnings growth for ACP from Australia is clearly ending. More will have to come from its foreign operations.
ACP is now very much under pressure from outlets to lift its game and improve service, a task it is struggling to do at the moment. It will be easier spending money in the UK where the returns will be better than spending the $55 million on new facilities, extra staff and improved service and distribution in Australia.
And fancy that it’s the old Poms who have the market that is attracting the Packer empire. This is a touch surprising given the suggestions over the year from British magazine publishers, such as Emap, that its home market was too small and they were expanding overseas to Australia and the US.
Both those moves have proven to be less than successful, especially in the US, and Emap no longer looms as the ‘foreign threat’ to every operator in the Australian industry.
Now with the gaming ambitions (more than $700 million reportedly through the private Packer company, Cons Press), plus Packer’s own legendary gaming habits, he will have more reason to spend time in the UK.
Bet there won’t be many stories in Best about how ‘my hubbie gambled the family’s money away’ type stories. Just as there aren’t many of those types of stories in the ACP magazines nor on the Nine Network.
And, of course, PBL is planning that joint venture with the Betfair betting exchange of the UK, if only it can get its licence to operate in Australia. Does the Packer empire have the clout to achieve this?