Managing growth is not an obvious or immediate issue for many publishers in today’s challenging marketplace. Yet, that’s just what Mark Allen Group (MAG) finds itself now having to do after what Chairman Mark Allen variously describes as an “excellent”, “stand out” and then “record” year. He is talking about the business-to-business group which he founded in 1985. And, he believes, valuable lessons for publishers now working to secure their own futures lie in its recent ups (and also downs).
MAG was established following Allen’s buy-out of British Journal of Hospital Medicine and The Physician from International Thomson Publishing. It has since grown steadily – in recent years, mainly through acquisition – to the stable of 85+ brands; 65 journals and magazines; 200+ events and ten exhibitions spanning ten or eleven different sectors which make up the business today.
Five years ago, when MAG was turning over around £16m, Allen set out to his colleagues an aspiration for turnover to rise to £50m by 2020 – a goal he is now confident will be achieved a year early. According to latest accounts, pre-tax profits rose from £3.67m to £5.01m and company turnover from £37.15m to £43.38m year-on-year during the 12-month period ending March 31, 2018. Allen’s hope now is that MAG turnover will rise to close to £100m in another seven years.
“Probably what this demonstrates is that we are bucking most of the publishing trends – we seem to be doing pretty well,” he observes matter-of-factly. “It is a reflection, I think, that we are not facing some of the same problems many publishers are.” That said, he adds: “We all live in challenging and difficult times, so you always have to be one step ahead of where you want to be. I am not – and don’t want to sound – complacent.”
Acquisition and diversification have been twin drivers of MAG’s recent growth strategy. Completing the week we meet are two deals. The first is the company’s acquisition of the assets of Rhinegold Group – the music and drama publisher founded in 1977 with the launch of what is now Classical Music and acquisition of Music Teacher. The second, in a separate but complementary move, is the acquisition from DC Thompson of Opera Now, which Rhinegold was publishing under licence.
This followed acquisitions of ICT publisher Miles Publishing; built environment publisher Unity Media; special educational needs show Tes SEN Show; and, from RBI, Community Care, the digital subscription-based resource and online news provider born of the one-time print magazine of the same name – all within the past two years.
“A lot of our acquisitions have been to a large extent opportunistic,” Allen readily admits. Five years ago, for example, MAG had no footprint in music; today, Gramophone, Jazzwise and Songlines are part of its music portfolio. “I’m interested in music. But the strategy has not just been about personal interest. Rhinegold’s assets, for example, also include all their archive and database. So for us, the enormous potential to build out premium content and provide subscription opportunities is probably the most exciting opportunity.”
It’s a constant search, he continues: “We acquire when we see magazines or brands or companies we feel we can extract more value from – in particular by developing synergies around them.”
Many interesting products and brands have been siloed off by bigger companies (especially those shedding their ‘publisher’ tag to re-invent themselves as ‘business intelligence providers’), he says, including some very good brands which can be turned around through a combination of TLC and 21st century publishing good sense.
“When we buy a magazine, the first thing we say to the editor and publisher is: ‘Could you do with any more pages?’ And they are surprised, and they say, ‘Yes, but you’re not going to do that, are you?’ And I say, ‘No, if you feel you can justify extra pages, let’s go with it and get the content right’,” Allen observes.
Apart from being the right thing when it is justified, this is also a way of encouraging them to engage more closely with their product and take ownership of it.
“We normally then follow up with an away day for editorial and advertising teams when they are asked to write a mission statement – because often with the kinds of brands we inherit, editorial and advertising people aren’t on the same side and don’t know what the strategy is. Then we divide them up to brainstorm ideas around issues and problems,” he explains.
“It’s all about engaging and empowering, rather than micromanaging”, he concludes. Which is why the emphasis within the company’s culture is on openness and participation. Everyone, from the most junior to most senior level, has access to information about how well (or otherwise) the title or brand or business they work in is doing. There are even annual soccer-style league tables shared within the business ranking different parts by the gross profit they generate.
Creating associated properties – a new event or conference aligned with a specialist magazine – is key. But also important is the amalgamation and pooling of related content from different titles serving a single sector.
“In my view, magazines are long term debts so I’m very reluctant to chop one off, and we don’t close many titles. But the fact is many of our magazines are quite niche, and in addition to doing their own thing, they contribute to our content pool online,” Allen notes.
“For example, we aggregate our clinical, nursing and hospital titles and sell that as an online product to universities and healthcare trusts. So even if a magazine is not doing particularly well in one respect, it may still be doing a good job in another.”
That’s not to say MAG doesn’t have under-preforming businesses, however – or, indeed, that even when needed, it won’t make closures. Recently, it folded its travel business, Master Travel, for example. And it has been working hard over the past eighteen months to reverse the fortunes of its MA Business division which, Allen says, in the year to 2017 had a “disastrous year”.
MA Business is a business-to-business operation comprising many of the brands MAG took on following a previous acquisition, of Findlay Media – serving sectors such as manufacturing, design, engineering, tech, management and aviation. A recent complete change of management and then a root and branch reassessment of the operation led to cost cuts and turned a loss to a £1.2m profit within a year.
Spreading the risk
Allen describes himself as “completely agnostic” when it comes to whether a magazine should be in print or online.
“What it must do is deliver in the format its customers most want,” he insists. “Where some publishers have gone in recent years has been to put all their eggs into the digital basket, which ended up with their print titles unloved and revenues under pressure as monetising digital was far harder than they initially realised.”
The key, he says, is to always have different product extensions around a magazine, because even if that magazine is not the most profitable, it will always be “the most identifiable flagship”. To be successful in the future, any publisher must have in place a strategy for keeping its options open to whatever content or product or format their audiences might want, Allen believes. And to deliver on that, a diverse business base is key.
“We are no longer a minnow, but nor are we a whale. In fact in one sense, we are a slightly awkward size. And as we are in ten or eleven different sectors, some might criticise us for this,” he observes.
“But I would counter that all of this means we are well-positioned, because as one thing goes down another goes up, and that spreads the risk. I like the fact we are in lots of sectors. And whether they are content or subscription or advertising-driven, most of the products we have in the sectors we are in are going well.”
Size is not everything, he insists. But if a publisher wants to keep on good staff, it must show itself to be a progressive and dynamic environment to work in and stay working in.
“I think you have an obligation to staff to try new things,” Allen says. “We are a private family-based company – there are no other shareholders other than the family. And we’re not overleveraged – until a few years ago, we had no bank borrowings, now we have some. But our debt is relatively low for a company of our size. We’ve achieved that without any additional help, so far.”
He now believes that MAG has got plenty of opportunity to go much further as, like other forward-thinking B2B publishers – and unlike many B2C players, it has, to a certain extent, de-risked and the need for quality journalism and the content it produces will only grow, not lessen.
“But we may now need to think of other ways of doing that,” he continues. “Whether that means getting other partners involved, I don’t know. But if you are going to get to £100 million turnover within the next seven years and do bigger acquisitions, then you probably need more access to funds.”
Watch this space, then, over the year ahead.