Exponent in £121m BBC Magazines buyout

Susannah Birkwood
16 August 2011

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Exponent Private Equity has purchased BBC Worldwideтs consumer magazine business BBC Magazines for ТЃ121m.

The private equity firm has also acquired the company's 50% stake in subscriptions fulfilment bureaux Dovetail Services and its share of magazine distributor Frontline, as well as full control of specialist publisher Origin.

Under the deal, Exponent will own titles such as Radio Times, olive and Gardens Illustrated, as well as have the right to publish other BBC-branded titles, including Top Gear, Good Food and Lonely Planet. The firm invested via its second fund, which closed on £805m in January 2008.

While BBC's commercial arm launched a £100m auction for the magazine business last year, the protracted sales process and its complexity are thought to have deterred a number of bidders such as Bauer – owner of Grazia and FHM – Future Publishing, Hubert Media and Haymarket Publishing. A decision to enter exclusive talks with Exponent was approved by the BBC Trust in May.

Already the owner of fellow publishing businesses Gorkana, GTI and Magicalia, Exponent believes that BBC Magazines has strong growth potential and an excellent team. Its strategy for growth includes capitalising on the opportunities afforded to the business outside BBC Worldwide ownership.

Completion is forecast to take place in the autumn, following approval from the Office of Fair Trading.

Debt
The debt structure for this transaction has not been disclosed.

Company
London-based BBC Magazines owns a portfolio of more than 30 consumer titles and websites. It also owns the Radio Times, which dates back to 1923. It saw a decline in turnover of 0.4% to £164.5m last year, but profits increased by 9.1% to £21.6m

The company's total annual sales now stand at almost 85 million copies, making it the UK's third largest consumer magazines publisher by retail sales value. A total of 62 licensed editions of its titles are published across 60 overseas territories. BBC Magazines employs 650 people.

People
Richard Lenane, director at Exponent portfolio companies Gorkana and Target GTI, led the acquisition, while John Smith, CEO, managed the sale for BBC Worldwide. Peter Phippen is the managing director of BBC Magazines.

Advisers
Equity – Travers Smith (Legal); PricewaterhouseCoopers (Financial due diligence); Jefferies (Corporate finance).