What AOL stands to gain in buying IPC

What AOL stands
to gain in buying IPC

Top UK publisher an ideal launch pad for Europe

By Jeff Bercovici

    For AOL Time Warner, the acquisition of IPC Publishing may have looked like a no-brainer.
    After all, if you're the world's biggest publisher and you're looking to expand, how better than to buy the biggest publisher in the U.K., provided you've got the cash?
    But size for size's sake isn't much of a strategy. Besides bragging rights, what is AOL Time Warner really getting for its $1.6 billion?
    Plenty, say media watchers.
    For one thing, it will give Time Inc. a powerful foothold in Europe at a critical time, with the increasing consolidation of the continent's media marketplace.
    Magazine consultant Martin Walker says the company couldn't afford to wait much longer to establish itself in Europe if it hoped to be competitive there.
    "They've been a little behind Condé Nast and Hearst in that regard," says Walker.
    Indeed, aside from international editions of Time and Fortune, the only magazines Time Inc. publishes in Europe are InStyle, which has British and German editions, and Wallpaper, a British design title.
    Not only does the purchase of IPC give Time Inc. a major presence in the U.K. overnight, it also provides a jumping-off point from which to begin conquering the many small markets that constitute Europe.
    "It's a lot easier to do it from London than from New York," says Walker.
    Then, too, buying IPC may have been the only plausible way for Time Inc. to pursue its aggressive growth strategy.
    "Enormous growth isn't possible here in terms of what's available," says Walker. "I think it's a better acquisition than Emap would have been," he says, referring to the recent auction in which Primedia bought the troubled Emap USA for $515 million.
   The seller in that case was U.K.-based Emap PLC, which, like Time Inc., had laid out around $1.5 billion in an effort to establish a beachhead across the sea.
    But Time Inc.'s trans-Atlantic invasion is less likely to end in disaster, says Humphry Rolleston, U.S. marketing director for The Economist.
    Though IPC may resemble Time Inc. superficially, Rolleston says it is more akin to Gruner + Jahr USA, a publishing house that rose to prominence on the strength of its mid-market women's service magazines but is now somewhat past its prime.
    "Time Inc. is pretty hard-nosed," says Rolleston. "If anyone can wring efficiencies out of IPC, it's them." An obvious place to start, he notes, is using AOL Europe to sell subscriptions.
    Another way in which Time Inc. may make use of its new purchase is as a platform for launching European editions of its American titles and as an incubator for ready-made magazine ideas that can then be introduced to the U.S.
    One IPC title that has aroused much speculation in this regard is Loaded, a men's magazine similar in format to Maxim, perhaps the best example of a British import that has flourished mightily here in the States.
    Rolleston, for one, believes that such cross-pollination will be rarer than many expect.
    "The two markets are very different. Just because you own a magazine over here that's a success doesn't mean it will work in Europe, and vice versa."
    Not surprisingly, Time Inc. spokesman Peter Costiglio says it will be some time yet before company executives will know how they plan to make use of IPC, which is currently profitable. One promising near-term possibility is that Time Inc. titles like Time and Fortune will take advantage of IPC's extensive newsstand distribution network.
    Further off is the prospect of advertising packages that integrate Time Inc. and IPC titles, says Costiglio, noting that the editorial areas covered by the two companies don't overlap much.
    For the foreseeable future, IPC will exist as a more-or-less independent company within a company, like the former Times Mirror Magazines, now known as Time4Media, which Time Inc. acquired last fall.
    "It'll run pretty much as a separate entity," says Costiglio.

-Jeff Bercovici is a staff writer for Media Life.

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