The value of women's lifestyle publisher Are Media, based on two magazine empires, ACP and Pacific, has come into sharp focus with its owner, private equity player Mercury Capital, putting the business up for sale.
What's it worth? A quick answer: Not what it used to be. The big valuations have long fled from glossy magazine covers into the digital world where advertising revenue still grows.
German family company Bauer paid $525 million in 2012 for what was then ACP, which had been a foundation of wealth for the Packer family.
Eight years later, Mercury Capital paid a reported, but unconfirmed, $50 million in 2020.
Since then Are Media has embarked on a campaign, a turnaround, to gather more digital advertising and become a commerce driven business.
A case of a glossy past seeking a digital future.
The latest numbers lodged by Are Media with corporate regulator ASIC are for the 2022 financial year, a loss making event.
The company then reported $337.48 million in revenue, $234,462,000 in gross assets and 868 employees.
The after tax loss was $4.2 million.
The biggest revenue line was circulation at $226 million, followed by advertising at $48 million.
At that time, the company was anticipating a decline in advertising revenue in line with industry trends.
This is when the company put together a five year plan to diversify revenue by content commerce and by digital advertising.
Last year the company said it had, via its content commerce strategy, sold $50 million of products over the past year.
Based on these accounts, albeit now a couple of years out of date, Mercury Capital will at least get its money back and will likely get up to $100 million if the right buyer, such as another media player, emerges.
Market analysts point to the audience of Are Media, women, and their take up of digital news and information. Even older women are getting their fix via mobile phone.
Based on these accounts, Are Media’s EBITDA (earnings before interest, taxes, depreciation and amortisation) fell almost 40% to $35 million in 2022, not counting impairment costs. Revenues were flat and costs higher.
One analyst told AdNews Are Media could be worth $90 million, based on four to five times EBITDA, a usual valuation for traditional media, plus any cash held by the business.
However, it depends on the buyer. Are media holds some very strong brands including the Australian Women's Weekly.
The details of Mercury’s pitch to market aren’t known. However, Are Media’s path to transformation is public knowledge.
Jane Huxley, the Are Media CEO, has been focusing on a strategy of becoming an omnichannel media company with strong capabilities in content commerce.
Along the way, as she describes it, the company has reset the technical foundations of our company, rebuilding from the ground up.
“We have replaced our internal systems and invested in our capability to manage and harness first party data to truly understand who our customer is, what she wants, and what that means for our partners,” she said in November last year.
“We’ve also made platform investments in our tools and partners to power affiliate marketing and content commerce."
She believes Are Media's content and deep connections with its audiences differentiate the company in a world that is fast moving towards AI generated content and copy.
A company positioned as quantity over quality.
“Our content is original and credible,” she said.
“It is created by real journalists, artists and designers who have high levels of emotional intelligence, based on their years of experience and a deep understanding of our audiences.
"Our brands play a relevant role in the lives of our consumers. Our brands are trusted advisers in the myriad decisions Australian women make about what to wear, what to buy, what to cook, what to read, where to go, how to take best care of themselves and their families, and plenty more.
“We know that content legitimises transactions. Every day, across our range of brands, we create cultural capital that influences buying behaviour. Many people come to our brands with the intent to buy. It's our job to work with our partners to turn that intent into action.”
To advertisers, Are Media’s content commerce strategy is about access to conversion-ready consumers.
This environment includes quality editorial, direct shopping links, live promo codes and real-time pricing.
Are Media, it tells advertisers, is not just serving ads, it’s creating entire ecosystems that close the loop between content and commerce: “intent, engagement and action”.
The 2022 numbers from Are Media:
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