The Deal: Under the deal Hearst will pay 651 million euros ($880 million) to Hachette-Lagardere for Hachette’s international magazines (outside of France). The deal excludes the Elle trademark globally for which  Hearst will become a Licensee (including in the U.S. and Mexico) and pay Lagardere a royalty based on Elle annual sales. In other 25 countries (including Brazil) Lagardere will continue to manage its existing network of Elle licenses (print and digital).

SYNOPSIS: Hearst's purrchase of Hachette's magazines outside of France will have the following implications for Mexico:

1. Elle and Quo: The crown jewels of Hachette-Mexico are marketed under a joint venture with Grupo Editorial Expansion, and Hearst is a partner of giant Televisa.

2. Crossroads: Hearst will  acquire the joint venture with Grupo Expansion, while keeping its other brands under Editorial Televisa.

3. With Hachette-Filipacchi’s combined assets, Hearst becomes the fourth largest magazine group in the country, whose popular titles rank among the top 50 magazines in terms of advertising and circulation, and among the top 60 best-selling magazines. These assets make Hearst the fourth largest magazine publishing group in Mexico.

4. Interesting and insightful market opportunity, with significant impact in Mexico, a country with over 12 million regular readers and 20 million occasional readers.

Hearst, Hachette: Implications for Mexico

In Mexico, Hachette Fillipacci owns the publishing rights for Psychologies for the next 5 years, along with licenses to other pubs such as Car & Driver and Crecer Feliz, which ceased publication in 2010 after Reader’s Digest Mexico gave them up.


Elle and Quo: The Crown Jewels of Hachette-Mexico (Grupo Expansion)

Undoubtedly, Hachette’s most important asset is its joint venture with Grupo Expansion for the publication of Elle and Quo magazines, an operation that generates more than $20 million in net income. Interestingly, before becoming part of Grupo Expansion, these titles were published under license by Editorial Televisa.

Hearst Partnership with Giant Televisa

In contrast, Hearst Mexico has focused its magazine licensing agreements and joint ventures under Editorial Televisa, which is undoubtedly the market leader in terms of circulation and advertising. Editorial Televisa has its own distribution arm and a strong presence in the U.S. Hispanic market, as well as throughout all of Latin America, particularly in Argentina and Chile.

In Mexico, Editorial Televisa holds a significant market share of the magazine pie. It publishes magazines in which Hearst holds shareholding interest such as Mecanica Popular (Popular Mechanics), Cosmopolitan, Harper’s Bazaar Mexico, Marie Claire and Esquire, which it added two years ago. The pubs have been managed with a wise business and marketing strategy, and are an integral part of its business model.

Televisa Restructures its Publishing Business

In a wise move, Editorial Televisa has spent the last 8 months extensively rehauling its business. It reorganized all areas of its balance sheet, such as efficiencies in paper purchases, negotiation of printing costs, aggressive changes in its circulation strategy, etc.  It also focused its priorities on its top 15 magazines, both the ones it owns outright as well as under license, resumed efforts to participate more actively in the digital market, revised its stock portfolio and ceased publishing titles that did not fall within a minimum range of marginal contribution.

For its part, Grupo Expansion is in the process of moving to multimedia, keeping the name Grupo Editorial Expansion to reaffirm its commitment to both Time Inc., its parent company in New York, (see article in English on Time’s acquisition of Grupo Expansion in 2005), as well as to its readers and advertisers.  Its goal is to continue producing quality content that can be packaged in any medium, with an intelligent structure that allows it to focus on markets with major audiences.  Its portfolio of titles and web properties include sites such as Metros Cubicos, Medio Tiempo, CNNExpansion, and Quien.

Hearst-Hachette: At a Crossroads in Mexico

With Hearst Magazines acquiring Lagardere  international brands, it is certainly in a crossroads in Mexico. On the one hand, it would acquire the joint venture with Grupo Expansion, while on the other; its own brands are under Editorial Televisa.

In the Hands of Two Competitors

Hearst will become a major player only with the acquisition of the wider group of magazines.  It has a portfolio of 8 magazines, all of them ranked among the top of each of their segments.

Hearst Would Become the Fourth Largest Publishing Group in Mexico

The group of magazines that will potentially fall under the Hearst Magazines portfolio (Grupo Editorial Expansion and Editorial Televisa Mexico) is without a doubt among the most popular titles, ranked among the top 50 magazines in terms of advertising and circulation, and among the top 60 magazines in sales.  These combined assets would make Hearst the fourth largest magazine publishing group in the country.

Hachette Lagardere Turns its Focus on France

Since 2008, Hachette Fillipacci Group has been restructuring its business model as part of a sophisticated and complicated strategic planning process tackling the great changes faced by print magazines in their migration to multimedia content, and allocating more resources to developing digital editions of its print magazines.  In this framework, it changed its group name to Lagardere (the last name of its main shareholder and current Chairman of the Board), and concentrated its focus on digital content and transforming the group into big brands, rather than big magazines.

In the past two years the group has focused on strengthening its presence in France.  Among other initiatives, it acquired 100% of Psychologies magazine (ranked 2nd in circulation and advertising share among all monthlies in France).

With regard to international markets, the group changed its business model from direct stakes in pubs to licenses only purchases, in order to eventually generate more than 20% of its revenue and profits from digital media.  In so doing, Lagardere has been able to shed affiliated offices and some joint ventures (such as the one in Mexico).

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