Future May Bid For BBC Magazines

Future Publishing (LSE: FUTR), the owner of more than 50 magazines, including Metal Hammer, Total Film and T3, has emerged as a contender for BBC Worldwide’s magazine division.

It is understood that Future, which owns magazines in Europe and the U.S., has been actively involved in the sales process surrounding BBC Magazines, although it is not yet certain if the British publisher will end up tabling a formal offer. Future Publishing would likely have to bid more than £100m for the division, which would mean that the publisher would have to look carefully at how to finance the bid.

The Bath-based company has cut debts from £38.3m to less than £7m in the past five years, creating headroom to increase its borrowings. Future reported profit before tax of £5.6m in the year to the end of September. However, Future only has a market capitalisation of £89m, making it likely to have to raise cash from some kind of share sale as well as increase debt if it moved to place a formal bid.

The company declined to comment.

BBC Worldwide, which is using KPMG to handle the sale, expects to receive formal, non-binding offers from two bidders this week. However, BBC asset sales take a notoriously long time to happen and several industry observers were sceptical a deal would be concluded anytime soon.

It is unclear who the final two companies set to put forward formal bids are, although the favourite is considered to be German publisher Bauer. Bauer has two operations in the UK – Bauer Media and H Bauer – publishing titles including Grazia, FHM and Match!.

Although Bauer – owned by a low-profile billionaire German family – can easily afford to buy the titles, a number of senior industry executives question whether a buyout would spark considerable competition concerns.

“I’m sure IPC [publisher of TV Times] would have more than a little to say about H Bauer getting Radio Times,” said one source. “It would mean control of something like 80% of the TV listings market.” H Bauer publishes TV Choice and Total TV Guide.

Other companies that have been linked with the deal include another German publisher, Hubert Burda, which has doubled the number of international publications it owns in recent years to almost 200.

BBC Worldwide is seeking a buyer to take all its magazines, which is understood to have put off a number of potential suitors looking to cherry pick individual titles. The BBC is also stipulating a large degree of control of its magazine brands.

In September, BBC Worldwide got the greenlight from the BBC Trust to start the search for a commercial partner to either buy, licence or take a majority stake in its magazine business, having previously said the corporation was restricted by constraints in both its borrowing capability and editorial remit, as well as having other strategic priorities.

The BBC publishes 34 magazines and the division saw revenues fall 1.3% to £168.3m. But profits rose by 13.6% to £18.4m in the year to the end of March, according to the most recent publicly available financial figures.

This article originally appeared in MediaGuardian.