Caxton has received significant interest from parties interested in buying titles up for grabs after its board announced its decision to close its entire magazine division earlier this week.
Anton Botes, general manager of Caxton and CTP Publishers, said he was confident the company would find homes for 80% of the affected titles, having received queries from a number of individuals and investors.
“There is a realistic chance most of the magazines will be sold,” he told The Media Online. But he was concerned that two of the titles, Woman & Home and Essentials, would be more difficult as they are published under licence.
“The minute you deal with licences, you deal with restrictions,” he said. “It’s an expensive model as you’re dealing with the exchange rate. And the problem with licenced brands is that you still have to localise your content because that’s what the reader wants, and that’s when costs go up.”
Botes said company management were surprised by the level of interest in news that the magazine division would close. “To be honest, we thought we could fly under the radar,” he said. “I think if the announcement had come under normal trading circumstances, it would have gone down differently. But with the noise around COVID-19, and so much happening, that wasn’t the case.”
Caxton has recently three magazines in the list of South Africa’s most read magazines revealed in the Publisher Research Council’s most recent Publisher Audience Measurement Survey, or PAMS: Bona at number two, Food & Home at eight and People at 11. So even being well-read doesn’t necessarily mean making money.
“Unfortunately readership is not an indicator of profitability and I know the industry wishes it was. Advertisers in print media mainly base their decision on circulation. As you know the radio and television competitors are bought on listenership and viewership which has always been a big disadvantage to print media,” he said.
As such, it didn’t make sense to keep printing three or four magazines as, “we still sit with overhead costs we can’t move or change; the model doesn’t work for us”, Botes said.
“We took 18 month view on the business. If you are in a bigger group where other parts of business are also under pressure, you cannot expect the print and packaging and community newspaper divisions to support magazines over 18 months,” he said.
“If it was a six-month window, we could say there was a chance of recovery. But we just don’t see that happening. In terms of ad revenue, we’re looking at about one tenth of what we normally do for June. And at the same time, consumers are under pressure too. There’s no V-curve, we’re not going to bounce back,” he said.
Botes said the company’s main concern was staff, as interested buyers had their own plans for the titles and “most indicated they would not be taking employees with them, which is their prerogative”.
Potential buyers had indicated they would change current business models. Botes said Caxton had always believed in a countrywide footprint for its magazine titles but this could change with new owners, who would push for “two or three major retailers”, along with reduced prints runs and even revised cover prices.
So where are the green shoots? Botes believes they lie in specialist titles and an omni-channel presence. Titles such as The Gardener, for example, speak to a devoted hobbyist audience who buy each issue. Same with Farmers Weekly. “But general interest titles are suffering. They have such a wide audience and are expensive too,” he said.
New models would include everything from podcasts to events, a digital and print presence, video … and niche audiences, he said.
Meanwhile, the main trend in the magazine sector will continue to be a process of consolidation. “The sector cannot maintain 420 or so magazines,” he said. “The reader has to be at the heart of the model. ‘Give me what I want at the right cover price’.”
And do it fast too because the reader/consumer is not spending too much time browsing and paging through magazines during a leisurely shop. And that’s not going to change anytime soon.
