Wednesday, 5 September 2012

Bauer Media's ACP Magazines purchase not all bad news

News just out yesterday is that a privately-held German company, the Bauer Media Group, has agreed to buy ACP Magazines for $500 million from Nine Entertainment Co, which is majority-owned by private equity company CVC Asia Pacific. Already there are patriotic murmurings, with Ita Buttrose regretting that a German firm would own the magazines. Today, the Sydney Morning Herald, following the same logic, pointed out that the Logies, which are owned by TV Week, would go with the sale to the Germans. Cultural icons, no less. Alackaday! In some quarters of Australia's media those murmurings will rise to a shriller level, and the acquisition will be heralded as a disaster. This is not only a shame, it's stupid.

Magazine publishing is a highly marginal activity nowadays, which is why James Packer decided, in 2006, to sell his media assets including Nine Network and ACP Magazines, to a foreign buyer. James is more interested in the more reliably profitable business of gambling. It's hard to blame him for that. The media impasse that is devastating companies like ACP and Fairfax is a global phenomenon driven by changes in the structure of the business. The internet, after all, changes everything. No Australian company was interested in buying ACP Magazines. Bauer Media Group was. The company operates in the UK and the US as well as Russia. It is a media company that runs magazines and radio stations. It has decided that it can make the ACP Magazines stable of publications profitable enough so that it can continue to operate them. Maybe.

But to get a better idea of how Bauer operates, journalists should be talking with people who watch the media in the UK and the US. Merely lamenting the loss to another foreign major of cultural assets that have been important to Australians - and profitable - in the past, is just poor journalism. The information is out there and waiting to be found, it is up to our journalists to make the calls, spend the time, and find it. Stoking up fear and irrational loathing within the Australian community is shoddy journalism, mere click-bait that relies on a strong xenophobic undercurrent Down Under. We don't hear a lot of people groaning about Aldi setting up shop in Australia; Aldi is another privately-held German company that has found its niche and sticks with it.

Even worse has been the response to the news that the big cotton farm, Cubby Station, located in southern Queensland, would be sold to a Chinese company. The National Party is outraged, it seems. But, here again, it's a matter of the owners getting the best possible price for an asset they are not really interested in continuing to own. It's very unfair to ask farmers to settle for a lower purchase price just because the best bid comes from overseas. Foreign companies that specialise in agriculture will be in a better position to contribute to the local economy by investing in the properties they purchase. It's not just the owner who benefits, it's a whole range of other people living around the property in question. Don't rely on what Barnaby Joyce thinks of the Cubby Station sale. Ask a farmer what he thinks of foreign buyers taking possession of land that no Australian buyer seems to want.

No doubt there will be many individuals working for those legendary Australian magazines that are included in the Bauer sale who will be carefully watching things in their work environment, now, for signs about their futures. But with a committed owner can come many benefits, including continued investment, and management changes that can actually work to make the enterprise more efficient and profitable. I suggest that Australian journalists look at how other Australian companies, in mining especially, have grown large through acquisitions in foreign countries, and think about the nature of capital, instead of focusing on the narrow, purely patriotic anxieties that make for more clicks.

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