Seven West’s double hit
Shareholders, ACCC throw spanners in deal plans
SEVEN West Media has copped a fresh blow as its takeover of regional affiliate Prime Media hits the rocks, with the broadcaster’s $40 million sale of its Pacific Magazines titles to Bauer Media also in doubt.
The ACCC yesterday flagged preliminary concerns over the proposed deal between Australia’s two biggest magazine publishers, which would result in Germanybased Bauer adding Pacific’s New Idea, Who, Marie Claire and That’s Life to a stable that already includes Woman’s Day, Woman’s Weekly, NW, Harper’s
Bazaar and Take 5. The regulator’s statement came an hour or so before Prime’s major shareholders defeated Seven’s $64 million takeover bid for the struggling regional broadcaster.
In response to yesterday’s competition fears, Seven West claimed the ACCC had not properly considered the impact of social media and digital giants on the magazine industry, but the watchdog says competition still has a role to play, even in a declining market.
“Pacific Magazines and Bauer are the only magazine publishers in certain categories, and their titles appear to compete head-to-head on content and cover price,” ACCC chair Rod Sims (pictured) said in a release.
“If Bauer bought Pacific Magazines, Bauer would remove its closest competitor in certain segments. Our preliminary view is that this would allow Bauer to reduce the effort put into content production and the range of content, or to increase prices.”
The Pacific-Bauer deal – which includes a cash consideration of $40 million and $6.6 million worth of advertising for Seven West with Bauer – was first announced in October, with both companies hoping to finish the transaction by the end of the year.
Seven West yesterday said the ACCC had taken “an overly narrow view” of the competitive dynamics for magazine publishers, and said the competitive constraints from digital and social media platforms had not been properly considered.
“Advertising spend on consumer magazines represents only 2 per cent of total advertising spend in Australia, whereas internet advertising spend accounts for more than 46 per cent of total advertising spend in Australia,” Seven West’s James Warburton said.
“In the face of proposed government reforms to redress the imbalance between traditional media businesses and the dominant digital platforms, the concerns that have been expressed seem misplaced.”