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Emap RIP: 1947 - 2008

Posted in Media, Arif Durrani, Latest reporters' blogs January 29th, 2008 by Arif Durrani

In years to come, 2008 will be remembered in the media business as the final resting place of the once mighty powerhouse, Emap plc.

Friday’s decision by shareholders to approve the sale of the company’s consumer magazine and radio brands to Germany’s Bauer for £1.14 billion [a world exclusive scoop for mad.co.uk in 2007] signals the beginning of the end for one of Britain’s most prolific conglomerates.

Another shareholders meeting in the next few weeks is expected to formally agree the £1 billion offer for Emap’s remaining business-to-business brands, made by the Guardian Media Group and private equity firm Apax Partners.

By the time spring arrives with its new beginnings, there could be just weeks left before the doors close for good on the UK’s second largest consumer magazine publisher and second largest commercial radio group. Add to this one of the country’s most successful trade exhibition businesses and a series of brand extensions that range from web TV to mobile, and you’d be forgiven for asking how did it come to this?

The company began life as a regional newspaper publisher called East Midland Allied Press in 1947, entering the magazine world with Angling Times in 1953.

This time five years ago, it was celebrating the appointment of Rob Munro-Hall as its new managing director of Emap Australia. Paul Keenan, chief executive of Emap Consumer Media, used the move to tout the company as the “fastest growing publisher in Australia” and committed to developing “its fame and stature”.

Finally, here was a decisive push to build on Emap’s UK and French operations and at last consign the previous year’s costly exit from the US to history.

With the advertising downturn that had dogged the beginning of the millennium behind it, and buoyed by the licensing success of its hit lads mag FHM, Emap seemed to once again have the world at its feet and an aggressive expansion strategy in mind.

Under the guidance of Emap International’s managing director Chris Llewellyn, and often following in the well-trodden footsteps of Hearst’s Cosmopolitan, FHM quickly grew its international publishing partners from 15 editions in 2002 to more than 30 by 2007. Back in the UK, 2004 saw the launch of Zoo Weekly and a whole new men’s magazine sector. This was followed by the launch of women’s weeklies Grazia and First.

Business was booming elsewhere too. The company won its first analogue radio franchise in 2003 with Kerrang! 105.2 in the West Midlands. This was followed with the acquisition of a 28 per cent stake in Scottish Radio Holdings from SMG a year later; leading to a full takeover of the company in 2005.

Meanwhile, developments on its events side saw the acquisition of France’s market leading exhibition business Agor SAS in 2003, the ownership of the advertising industry’s Cannes Lions in 2004 and the ultimately doomed attempt to buy construction business ABI.

Despite criticism for being too slow to respond to ‘digital’, Emap did make a number of significant acquisitions in this arena too. The decision to buy the still burgeoning fashion portal WGSN for £140 million in 2005 continues to standout as one the best acquisitions during Moloney’s four-year tenure as CEO.

Other digital buys include the business portal AME Info in the Middle East, the mobile user-generated content business YoSpace, and most recently the subscription-based online service Torcello Publishing.

Too little too late, came the cry from sidelines, as the now rather disjointed media behemoth started to post a string of profit warnings. Falling circulations and changing consumer habits were starting to take their toll in its print and radio markets, and new competitors were emerging at every turn.

In 2006, Smash Hits magazine closed after 28 years, Bliss magazine was sold and the publication of FHM was suspended in America. The same year saw the company’s exit from France after fierce competition from local publishers.

A year later, 50 per cent sale of its music TV business Box Television was sold to Channel 4 and Emap disposed of its Australian consumer magazine division for some £38 million.

Meanwhile, City analysts were starting to take an active interest in the company, attracted by its fluctuating stock price that was ultimately under performing the FTSE 100 index.

Tom Moloney’s resignation in May saw Emap’s shares jump almost 7 per cent; a sad indictment of his reign and also a reflection of just how open the City believed the conglomerate had become to takeovers. If ever there was a case of the sum of its parts looking more valuable than the whole, here it was.

For a company that generated more than £800 million in revenue last year, its final price tag of some £2.4 billion is a telling comment on how uncertain its future is seen within the media landscape.

Compare this to social networking phenomenon Facebook, which is valued at £15 billion by Microsoft’s stake, despite generating less than £15 million in 2007.

Other ‘traditional’ publishers will have been following proceedings carefully; who will be next on the auction block?