Two weeks on from the Emap board’s announcement that it was considering the break-up of the publishing group, what’s next for the media giant and its employees?
The possible splitting up of Emap into its constituent parts – consumer, B2B, TV and radio – is a situation made more likely by the lack of a chief executive, since the departure of Tom Moloney in May.
The group has announced it would consider all options, in light of a number of ‘unsolicited proposals’for unspecified assets.
One of these ‘proposals’is an informal bid from private equity firm Apax Partners, which is understood to have offered £1.3bn for the B2B division, the sale of which as a unit seems the most straightforward proposition. Emap derives 45 per cent of its overall profits from B2Bs.
This potential purchase would mean the B2B division merging with Incisive, which was acquired last year by Apax. Other contenders for the B2B side include Emap’s main competitors in the UK: Informa, Reed Elsevier, Taylor Nelson Sofres and United Business Media.
Radio and TV have both been subject to offloading this year, with the sale of Emap’s Irish radio stations to Communicorp and a 50 per cent stake in its TV assets to Channel 4. Disposing of these businesses and the consumer division are likely to present bigger challenges to the board.
The consumer portfolio is currently the weaker sibling to B2Bs. In the past, it was taken for granted that as part of the unique Emap portfolio you had both sectors and that when one was weak, the other would prosper, keeping the business on an even keel. This, it seems, doesn’t wash with investors anymore.
The consumer sector could be subject to a piecemeal or wholesale sell-off. The potential for the former could be decided in part by the interest or lack of by IPC, as the biggest magazine company in the UK and Emap’s nearest competitor in some of its more attractive titles.
Already, News International and Future have been rumoured as interested in sections of the portfolio. But a piecemeal sale could leave less desirable titles unsold.
The alternative is a wholesale purchase of the portfolio. Emap’s slowness in developing a digital strategy means a potential buyer will have to invest heavily. This paves the way for a private equity sale – taking the consumer side of the company off the stock exchange, investing in the web before returning the company to market in the next couple of years. Such a purchase would likely mean the consumer portfolio remaining Emap in name.
The private equity firm would be charged with improving operational efficiencies, but would also be likely to sell off titles, creating further uncertainty within the newly formed company.
A further option is that the status quo remains. Executive chairman Alun Cathcart has said that this remains a possibility.
But despite Cathcart’s reassurance two months ago that a break-up of the company was not on the cards, Moloney’s exit now appears to point to a disagreement at board level about just that. ‘It looks very much like it was agreed in principle many months ago between the board and investors. Moloney disagreed with it and packed his bags,’said one industry source.
The review process is expected to take at least nine months to a year. In the meantime, Emap faces the challenge of maintaining its day-to-day business, presenting and implementing growth strategies while managing the biggest structural shake-up in its history.
One City analyst said this would inevitably take its toll on the company, because management will be distracted from the day-to-day.
The other challenge is to pursue its digital strategy and attract new talent while managing uncertainty. As one source put it: ‘Are they going to be able to make difficult decisions about web strategy if the consumer division could end up being owned by somebody else in six months’ time?
‘This is the problem – exactly at the point at which Emap needs a clear strategy for its consumer magazines online, there is paralysis. That’s one thing investors will worry about.’
What does this mean for staff? The message from the board is to hold tight and carry on business as usual. The NUJ is only officially recognised in the B2B sector but both it and broadcast union Bectu have urged staff to join up.
Anna Murray, national official at Bectu, said the union can support members individually or collectively.
‘Don’t wait. If something has already happened to you and then you join the union there’s a limited amount we can do,’she said. ‘People need to join before anything happens.
‘Get organised and face it together – that’s the important thing, that people work together and understand their current terms and conditions if they are transferred. It’s much more powerful if we all talk together.”
Murray advised employees to know, in advance of any transfer, the details of their contract, to ease the process of negotiating.
She said: ‘Lets hope that any new company will give people at least as good [conditions] as they currently have with Emap. But there are some people who have final salary pension schemes and the new employer has to be able to take that on. The legislation doesn’t force them to do that, but we will be completely opposed to any deal that didn’t guarantee the whole package to be the same as people get now.”