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Bauer Pacific Merger Gets The Wobbles As ACCC Step In

A day after giving Seven Media the nod on the merging of regional TV network Prime the Australian Competition and Consumer Commission (ACCC) has rang warning bells over the proposed merger of Pacific Magazines with Bauer.

The proposed merger hit its first hurdle with the ACCC claiming that the proposed mega magazine merger will impact the viability of both publishers’ weekly titles.

New Idea, Woman’s Day and That’s Life and Take 5 were the four titles named in the announcement from the ACCC, with the commission saying they are direct competitors and the deal would thus remove competition from the market.

ACCC chair Rod Sims isn’t satisfied by the initial review of the Bauer Media and Pacific deal.

But, Seven CEO James Warburton said he doesn’t think the watchdog has fully considered all aspects of the deal Mumbrella claimed.

ACCC chair Rod Sims claims the commission was “acutely aware” of the complexities of the industry.

“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,” Sims said.

“We are acutely aware of the dramatic decline in magazine revenue, both in terms of lost advertising and reduced sales. The trends in the media sector were considered closely in our Digital Platform Inquiry final report published in July. Many magazines titles have closed over recent years, and more titles will close irrespective of this deal.

“However, competition within markets has an important role to play to protect consumers, even in declining markets,” Sims said.

He claims the ACCC has ignored the competitive constraints of the industry.

“Advertising spend on consumer magazines represents only 2% of total advertising spend in Australia, whereas internet advertising spends accounts for more than 46% of total advertising spend in Australia,” said Warburton.

“At a time when the ACCC itself is looking at the impact of digital platforms on traditional media businesses and 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.

“The transaction represents an opportunity to provide a stronger base for these titles to compete into the future against digital platforms.”

Both Seven and Bauer said they would continue to work with the ACCC as the deal progresses, with Bauer saying it still expects the deal to be completed in early 2020.

Bauer agreed with Seven, with Adrian Goss, Bauer Media general counsel, saying the publisher was surprised the deal hadn’t passed preliminary approval.

“In view of the ACCC’s own findings in its recent Digital Platforms Inquiry, we are surprised that it has not cleared the acquisition at this stage. While we are confident of receiving clearance in the New Year, the ongoing uncertainty is enormously challenging for Pacific Magazines’ staff and the business more generally. Bauer Media has always seen the acquisition as a positive step towards ensuring the sustainability of print magazine publishing in Australia,” Goss told Mumbrella.

“The key Bauer and Pacific Magazine titles remain profitable, and in some cases average more than 1m readers per issue.

“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.”

And despite the rise of online publications, Sims said, consumers still value print products.

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