ACCC Greenlights Big Magazine Distribution Buyout
The ACCC says it will not stand in the way of publishing giant Are Media’s bid for Australia’s largest magazine distributor.
Are Media, the biggest magazine publisher in Australia and owner of titles including New Idea and The Australian Women’s Weekly – which retailers often turn to for ad space – is looking to buy Ovato Retail Distribution, an arm of major printing and communications firm Ovato, for $15 million in cash plus negative working capital of around $27 million.
The consumer watchdog said today it would not oppose the deal, which it was looking into for its potential impact on rival magazine publishers which could lose access to the service.
According to ACCC Chair Rod Sims, Are Media would not have sufficient incentive to favour distribution of its own publications over rivals.
“Consistent with the ACCC’s findings when it considered Bauer acquiring Pacific Magazines in 2020, circulation and revenue of most magazines continue to decline significantly, and many titles have closed over recent years.
“Historical sales data showed that consumers that still buy magazines have a high level of loyalty to particular titles, meaning that very few consumers would switch to an Are Media publication if it favoured distribution of its own magazines over its rivals’ publications,” he said.
On the contrary, Sims said Are Media would in fact be incentivised to deliver as many magazines as possible irrespective of publisher, owing to continued decline in magazine circulation and high fixed distribution costs.
“We also note that Are Media is heavily reliant on ORD to distribute its magazines to retailers, and therefore has an interest in securing its distribution channel, particularly in an industry facing continuing decline,” he said.
The acquisition is also under review by the New Zealand Commerce Commission.