The Australian Competition and Consumer Commission (ACCC) has given Bauer Media its approval for the proposed acquisition of Pacific Magazines (ASX:SWM) ruling the transaction was not likely to substantially lessen competition in relevant markets.
The move is a significant change from ACCC’s initial review on 23 October 2019, where it raised concerns about the proposed $40 million sale of Seven West Media’s Pacific Magazines to Bauer Media with the key sticking point being it would rid Bauer of two key weekly competitors.
Should the deal go through, Pacific Magazines’ New Idea title, which competes with Bauer’s Woman’s Day, would come under the Bauer stable, along with Pacific’s That’s Life magazine which targets a similar market to Bauer’s Take 5.
In terms of printing contracts, Ovato prints all 34 of Bauer Media’s titles including Woman’s Day and the Australian Women’s Weekly. The other key player in the catalogue and magazine printing market, IVE Group, prints the Pacific Magazine titles.
The ACCC said that it has carefully assessed the impact of the merger, given the close competition between the parties’ key print magazines, Bauer’s Woman’s Day and Take 5, and Pacific Magazines’ New Idea and That’s Life!.
“The significant declines in the circulation and revenue experienced by many magazines are sustained, substantial and likely to continue, resulting in less investment in content and fewer retail promotions,” ACCC Chair Rod Sims said.
“We note that some magazine titles have already closed, and others are likely to follow, regardless of this deal.
“We also note that the content offered by the four key magazine titles, including celebrity news, ‘real life’ stories, puzzles, and food, health and lifestyle tips, is all available from other sources.
“Ultimately, we determined that although there is a notable level of competition between the particular print titles, the transaction was not likely to substantially lessen competition because publishers in other media, particularly online publishers, will increasingly compete with Bauer.”
The ACCC also said while many of Bauer and Pacific Magazines’ customers value the tactile nature of physical magazines, they are often not regular buyers of the magazines and that others see online content as a ready alternative which should constrain Bauer’s ability to raise prices or reduce investment on content.
In October 2019, IVE Group and Ovato supported Seven West Media’s binding agreement to sell Pacific Magazines, with IVE Group executive chairman Geoff Selig telling Sprinter that IVE has a longstanding and strong relationship with both Bauer Media and Pacific Magazines and he expected that would continue.
“There’s been quite a lot of consolidation in the publishing sector over the last decade so the coming together of the two largest publishers is probably not unexpected given there’s been some talk about it in the market for some time,” Selig told Sprinter previously.
“From an IVE Group perspective, we have a good relationship with Pacific Magazines and Bauer Media and have done for some time and we would be hopeful of continuing to have a meaningful relationship with the combined organisation.
“Given we are the largest printer in the country and the diversity of our offer as well I would think we would continue to be a good fit for the combined business.”
Ovato chief executive officer Kevin Slaven also said at that time that the move is positive as it demonstrates focused investment in print magazines which in turn benefits the printing industry.
“It’s a positive move and demonstrates Bauer’s future focused investment in print magazines in Australia, which in turn is good for the print industry. We have shown our commitment to both publishers over the years and ongoing will provide the specialist print and distribution services required to get their brands to market,” Slaven said previously.
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