Three months after the sudden resignation of Bauer Media CEO David Goodchild his interim replacement, and one of the publisher’s top global executives, Andreas Schoo sat down with Mumbrella’s Miranda Ward to discuss the future of Australia’s largest magazine publisher.
Andreas Schoo’s entry into the Australian market was something of a baptism of fire – with news of the closure of much-loved magazine Cleo and the subsequent outpouring of grief pre-empting his arrival in the country by a matter of days.
The closure of Cleo – an icon of the Australian magazine space – capped a traumatic six months for the publisher which had lost its CEO David Goodchild, sales director Tony Kendall, and its most high-profile editor Helen McCabe, stirring considerable concern about its future in this market.
With regard to the closure of Cleo, Schoo concedes the company underestimated the size of the public and media reaction to the news of the closure of a title launched by media industry doyenne Ita Buttrose and cemented into the mind of Aussies with the miniseries Paper Giants.
“To be honest I was surprised,” Schoo says when asked if he expected the extent of the public and media reaction.
“We did make some mistakes, mistakes can happen. Our mistake was we should have informed our people, before we informed the public.”
His comment refers to how the news leaked to The Daily Telegraph days before he had even arrived in the country – and well before the Cleo team had been formally told of its closure.
No-one was shocked when Schoo’s first act upon arrival in Australia was to formally shutter the struggling magazine.
“Cleo was a fantastic brand during the 70s, 80s and 90s, with a really important role in the market, but the situation changed with a lot of new alternatives in the market, a lot of digital alternatives, and Cleo lost part of its role,” Schoo said.
“The magazine was loss-making for a couple of years, at the end we saw that the decline was without any kind of recovery.”
Cleo saw its circulation collapse from 149,256 in the first half of 2008 to just 42,212 copies in the first half of 2015.
The hunt for a new local CEO
Schoo claims Goodchild “did a good job”
Schoo’s primary role is to appoint Goodchild’s permanent replacement, a job he says he feels no “time pressure” to rush through.
“I’m taking my time to understand the country, the business here and to understand the company while looking for a new candidate,” he said.
“I hope to have one by the middle of the year, which means from June to August, or even September.”
Schoo confirmed he is committed to appointing an Australian to the role.
“I am looking for a person with strong experience in digital and print and an understanding of brands on both platforms,” he said.
When questioned if he was looking externally or only within the company, the German business executive chuckled, before declining to respond, saying: “I don’t want to talk about this.”
If Schoo is hunting for an external option it means former Pacific Magazines CEO Nick Chan and current NewsLifeMedia CEO Nicole Sheffield could be strong candidates.
Reflecting on Goodchild’s time in the top job, Schoo asserted he “did a good job”.
It’s a view contradicted by many Bauer insiders, who described him unflatteringly as “The David Brent of Park Street” (a reference to Ricky Gervais’ character from The Office).
Elaborating on why he believes this, Schoo said: “He did a good job. He started a lot of new initiatives. But he was also responsible for the UK business and for that reason Yvonne Bauer decided to make a switch and look for a new CEO for the business.”
Asked whether it was a mistake to hand the Australian business to someone with responsibilities in London – Goodchild was also responsible for H. Bauer Publishing, a separate division of Bauer Media Group – Schoo is again reluctant to comment, saying only: “I don’t know how strong he was in both businesses.”
According to Schoo, Goodchild did achieve “big digital steps” for the company, despite some industry insiders claiming, that under Goodchild, Bauer’s digital strategy had come to a “screeching halt”.
The Bauer CEO cited the launch of Bauer Media’s digital company, Bauer Xcel Media, in February 2015, and acquisition of BeautyHeaven Group as two achievements in the digital space.
“We acquired BeautyHeaven for a huge amount of money; it was one of the biggest digital investments in the Australian market here.
“It’s a wonderful fit for us because now we are by far the number one beauty destination in market.”
Transforming a print company into a multi-media outfit
On his agenda during his time as interim CEO, Schoo says he is focused on the traditional publishing company’s transformation to a more multi-media company.
“We must bring the company from a magazine company to a more multi-media company that is platform agnostic and that has more revenue sources,” he says.
“That’s the main challenge we face during the next year and we’re on a good way there.”
Schoo rejected the idea that Bauer Media has been late to the digital party; however, admitted the legacy arrangements from its former incarnation, ACP’s, deal with Ninemsn, which saw digital properties managed externally, were not ideal.
“There were restrictions. We were part of the Ninemsn network and there were some legacy arrangements that weren’t too easy to get rid of,” he said.
Bauer Media separated its print and digital divisions globally – creating Bauer Xcel Media – in February last year after implementing the strategy first in North America in August 2014.
Schoo said it is obvious why Bauer split the two divisions into separate companies.
“We think we need more emphasis on digital. Our competitors are the traditional media companies but there’s also lots of competition, from Yahoo to Google,” he said.
“Therefore we decided to start our own digital company Bauer Xcel Media which has 140m unique users worldwide. It’s a huge company. It’s a brand that is across New York, London, Hamburg, Sydney.”
It is Bauer Xcel’s position as a global company that Schoo said makes it “really attractive” to its staff “because they can switch from one city to another”.
Schoo rejected the idea that separating digital out doesn’t help put digital, and a push to be multi-platform, at the centre of the publishing company.
“Print and digital need different skill-sets and our digital department are perfect digital people and our print department has a lot of wonderful print editors,” he explained.
“Of course there’s an overlapping. We need strong co-operating between them as there is only one customer and we need one face for the customer. We need an exchange between the editorial teams.”
Rumours persist of frustrations in bringing the print and digital teams together, with Bauer’s Xcel digital teams understood to sometimes struggle to gain access to their print counterparts’ news meetings.
On this question, Schoo says he is unaware of a problem. “I don’t want to say it’s not true; I don’t know the background,” he said.
“There should be an exchange between both parts but both parts have their own responsibilities. Digital editors should have access to print and the other way around.”
The Australian magazine market
Schoo is eager to emphasise that he is pleased to be in the role, describing heading the Australian Bauer Media operation as an “unbelievable experience”.
“We are big in Europe but we aren’t as big as Bauer – or ACP – here in Australia. ACP is in an unbelievable market position, every second magazine sold in Australia is from our company,” he said.
“We’ve found there’s a lot of fantastic people here in the company with good skills, much better probably than some of our European operations. I’ve found a company with fantastic products, good people in an interesting market.”
Schoo, however, admitted there is “tough competition” in the local industry.
“What’s good for the whole media scene is that tough competition,” he said.
Despite significant print circulation declines across the magazine sector, Schoo remained upbeat.
“When I came to Australia I was surprised by the circulation. It’s unbelievable. When you see a magazine like Women’s Weekly, we sell 400,000 every month – that is an unbelievable figure.
“It means Australia has really weathered magazine market. Of course there are some challenges in the market; it’s a similar situation around the world.
“It’s not the 90s, it’s 2016 and there is much more competition from social, from new digital, from you name it.
“Our users have different habits, our clients have different habits – it’s much more competitive in market, it’s much faster than 20 years ago. At the end, it’s very similar around the world.”
Schoo rejected the suggestion that Bauer Media might have underestimated the challenges faced by the local market – particularly circulation and advertising declines.
“We know these kinds of markets. We are already very good in the US and there it is a similar situation: 80% advertising revenues and 20% or even less distribution revenues,” he said.
There was a strong assessment when we acquired the company. Of course we know it’s a lot smaller market than the US. It’s a higher income here, it’s a wealthy country and a lot of good educated people here, that’s what counts.”
The revenue challenge
While Schoo admitted the company is dependent on advertising dollars, he said Bauer Media was looking at new ways to monetise its content and audiences.
“The whole business has changed from classic display advertising to programmatic buying to native advertising and both are really relevant to our future revenue split,” he said.
“E-commerce is, of course, an important part of it. Lead generation is also an important part of it. There’s also lots of new possibilities. In the US we make a lot of money with surveys; we have a partnership with a big market research company.”
Despite Standard Media Index figures for Bauer revealing media agency spending has been on the decline for the past eight years, Schoo remained “absolutely convinced” that magazines are a “fantastic platform for advertising”.
SMI figures show ad spend from media agencies – which doesn’t include any direct advertising revenue – has dropped by almost 70% from almost $200m in 2007, to just under $108m when Bauer took over in 2012, to just $57.5m last year.
“When you see the reach of our biggest brand, Women’s Weekly, which every month reaches more than one million people. We can offer our clients something really compelling,” Schoo said.
Former News Corp executive Fiorella Di-Santo
In February Schoo filled the company’s vacant sales director position, appointing former News Corp executive, Fiorella Di Santo, to the role.
“She has a strong print background but she also has a strong digital experience,” Schoo said. “She was responsible for the co-operation between print and digital [at News Corp].”
During her time at News Corp, she led sales across its metro, community and digital assets. She also led the integration of the print and digital sales teams.
Said Schoo: “When I had the interview with her I was really convinced she was the right woman, as in the future we need to have strong co-operation between print and digital and she’s the right person for this.”
Does Bauer have radio ambitions?
Bauer Media has a radio division in the UK with its radio plans in Australia a consistent subject of the industry rumour mill.
There have been numerous reports that the German media giant has made repeated efforts to buy Lachlan Murdoch’s Nova Entertainment, operator of the Nova and Smooth FM networks.
While Schoo did not deny the company’s interest in the Australian radio market, he rejected the idea that there are any discussions currently on the table with Murdoch’s Nova Entertainment.
“We are a really active company with a lot of M&A activity around the world,” he said.
“Nova is, of course, an interesting target but there aren’t any discussions right now and we can discuss it when these targets are on the market.”
The future of Bauer
Asked about its long-term future Schoo is adamant that Bauer Media still sees a “long-term future in print”.
“We see lots of possibilities. In the last few years around the world we’ve launched around 50 new magazines,” he said.
“You need good quality, it must be the right product for the right audience. There are a lot of opportunities, you need courage to do this but I believe in it.”
However, this doesn’t mean Bauer’s entire print magazine portfolio in Australia is safe.
“It’s a really evolving market and we need some tough decisions but there aren’t any to make at the moment,” he said when asked if any of the company’s magazines were on the chopping block.
Schoo refused to say which titles are safe, for the moment.
“I wouldn’t say that because it’s a quick market,” he said. “Companies always have to rethink their portfolio range. We will see.”
Schoo also didn’t rule out the further consolidation of the editorial teams behind their products; however, he was keen to address a rumour that was floated in the wake of Cleo’s closure.
Asked about the idea that Bauer would look to combine the editorial teams for Woman’s Day and The Women’s Weekly he ruled it out.
“There were never any ideas about this,” he said to rumours which circulated after the departure of AWW editor-in-chief Helen McCabe.
“They’re both top brands and we would never do this. We have other magazines we’d like to see better co-operation between, to build some hubs for some parts of the business.”
Looking to the future, Schoo said the company needs to work on all its products.
“We need even better products, we need better understanding of our target group and good distribution,” he said.
“We already have fantastic distribution but times are challenging and each part of the company must be a little better in the future.
“We are the number one in the market and what I see in other markets, is it is always the number one or two who have the best chances.”
In 12 months time Schoo wants the company to have made “bigger steps” in its journey from being a magazine-only publisher to a multi-media company.
“We need to be more multi-media with our brands, to have even bigger websites but to also have stabilised our print circulations,” he said.
Miranda Ward is Mumbrella’s Publishing and PR editor
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