Oct 2, 2020

A German place in the sun - Colin Morrison - 2 October 2020 German companies have a special place in the recent history of the Australian magazine market. Bauer’s name was this week finally extinguished from the former ACP Magazines. The overwhelming Aussie market leader is now called “Are Media” (“Audience, Reach & Engagement”). You might think that the written-down prospects for the legendary publisher are very much brighter than the brand name itself. But at least it’s the formal end to the Hamburg company’s disastrous links with Australia which began exactly eight years (and hundreds of millions of dollars) ago. Family boss Yvonne Bauer ‘s euphoric first few months in the Sydney sunshine might just have encouraged another German publisher to take its own somewhat smaller plunge into the AsiaPacific the soon after. It was seven years ago this week that the lesser-known Forum Media Group (FMG) acquired the specialist Sydney-based publisher NextMedia which had aggregated some 40 magazines (covering sports, motoring, tech and food) during five years of private equity-backed deals. The privately-owned FMG is believed to have paid some A$20m for NextMedia, then believed to be generating about A$3m EBITDA from A$30m revenue. The revenue may now have fallen to A$20m and profit to about A$1m. But, even back in 2013, it looked an odd target for a company which had grown in Germany and internationally, mostly in B2B media. NextMedia may once have accounted for almost 30% of FMG’s worldwide revenue and it remains the B2C oddball in the FMG portfolio of B2B information and events. For the 32-year-old German publisher, it has been a sobering experience. But owner-founder Ronald Herkert has come a long way since he launched a B2B newsletter with one other employee in 1988. He had been a merchant navy sea captain before studying finance and working in a publishing company specialising in tax-related content. That was his motivation to go it alone and, initially, to specialise in literature on compliance in Germany and Poland. It was a smart move for a company which was then said to be making 10-15% profit margins. FMG now employs more than 1,100 people in Europe, Asia, North America, and Australia, and is based in Merching, near Munich. In 2019, it had revenue of €120m and an EBITDA margin of about 12%. This year, Covid will restrict revenue to some €100m but the company remains profitable. Some 70% of revenue comes from B2B. Its three largest countries are Germany, Poland and Australia. Until Covid, FMG had been growing annual revenue at an average of 17%. Its most successful acquisition was Kenilworth Media, in Toronto, acquired in 2014, which now operates across North America with B2B media in retail, construction and veterinary. Despite the revenue loss, especially in events, Ronald Herkert is optimistic about his company’s digital developments. But you wonder why he ever stretched into consumer magazines in Australia. It’s not a Bauer-like disaster, of course, and NextMedia remains profitable. But, perhaps, it may not be too long before FMG follows Bauer into the Sydney departure lounge.