By Chris Legg
Chris is a partner and Senior Managing Director at Progress Partners. Chris lives in Cambridge, MA, and is based in Boston.
October 19, 2017 ? Coming into the fourth quarter, we?ve seen some impactful transactions in traditional publishing and print magazines that are closing out the year. The Hearst-Rodale acquisition, feels both relevant and timely as it relates to the current and future state of our media industry.
Hearst has agreed to acquire Rodale (family-owned publisher of Women?s Health, Men?s Health, Runner?s World) for a reported amount of $225 million, expecting to close early in the new year. With Meredith Corp. and America Media Inc. among the reported interested parties, we continue to see a momentum towards consolidation in the magazine and print industry ? particularly as we develop new formats for the consumption of all forms of content.
As the magazine industry experiences challenges in maintaining circulation and print advertising / newsstand revenue, consolidation of notable titles continues to be a trend ? especially among mid-tier publishers. We?ve seen this through acquisitions like America Media Inc. acquiring US Weekly and Men?s Journal from Wenner Media, the same company looking to sell their majority stake in Rolling Stone.
Rodale?s decline in viewers, ads, and sales is reflected in the reported deal amount, approximately 1X gross revenue. Why is a smart move for both parties? This transaction will up Hearst?s position in the licensing industry (Hearst currently posts $350 million in licensed retail sales, Rodale $155 million) and provides a great home for Rodale. Given Rodale?s focus in the health and wellness publications category, their titles will open Hearst?s client base as they diversify into more demographics, attracting the Rodale client base while at the same time giving Hearst the tools to continue to nurture their strong existing partnerships with other behemoth networks. This strategically sets them up to perform well in the trend of consumption through multiple platforms with a wide array of quality content and expands their library.
Hearst continues the expansion of its global portfolio with Rodale?s established presence in the UK, Netherlands, and Japan, particularly in digital formats. Their existing partnership in these markets has yielded very positive results in response to content. Rodale has struggled in the past to balance its print and digital businesses, which Hearst will address with its proven reach and experience.
As we see more acquisitions roll up and consolidate the traditional media space, the larger platforms have the tools to push the content and technology to react quickly to how the consumer digests content on their multiple devices.
This is a smart move for both parties ? we expect to see more consolidation as technology changes the distribution and only those who have access to these tools will survive.
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