Ever since Emap announced a review of its structure in July, it has been clear the company that will emerge from the process will look very different from the Emap of old.
Emap originally intended to sell its TV, radio and publishing operations as whole units. But it has become increasingly likely that the company may need to go further, by selling off individual assets piecemeal.
But while such a plan may help to generate the returns demanded by shareholders, moves to sell off Emap brand by brand raises significant issues. For example, does the buyer of Kerrang! magazine then gain ownership of the Kerrang! website, Kerrang! TV and Kerrang! Radio?
And will the new owner of Kerrang! magazine see any value in owning a single radio or TV channel?
In recent years, Emap has built up household media brand names such as Heat, Kiss and FHM to become among the leading multi-platform media products. Emap operates 50 lifestyle and specialist consumer magazines, 42 local and eight national commercial radio stations, plus seven digital TV channels. Earlier this year, Channel 4 bought a 50% stake in Emap TV.
Licensing rights
Last week, an Emap spokesman would only say that "comprehensive licensing restrictions would be in place" before any arm of the business was sold. But two sources close to the sale said that, in most cases, the primary product would hold the licensing rights to brand extensions.
In the case of a brand such as Heat, whoever bought the consumer magazines division, would be the licensee for that product. The primary brand would also retain first rights to the website and would have to approve any major offshoot changes beforehand, in order to preserve the brand.
But while one source compared the licensing deals with those used by the Virgin franchise, many in the field say the move would at best be a negotiating nightmare.
IPC Ignite managing director Eric Fuller says: "It's difficult to see any advantage whatsoever to a new owner by fragmenting the brands in this way. The strongest way to manage any brand is under the same roof. For example, with NME, our magazine people work with our online people, and help produce mobile and now TV content.
"The Emap break-up poses all kinds of practical operating difficulties. The company has built itself up as a multi-platform media company, but how do you untangle those different branches of the same brands? It strikes at the very heart of what it was initially trying to achieve."
Numis media analyst Richard Hitchcock says it has always been difficult for brands to extend themselves to other platforms, which would be exacerbated by selling off slices to different owners.
"There is no doubt that the attraction for Emap bidders is the brands themselves, and the whole point of the break-up is to unlock that associated value," adds Hitchcock.
"What will be a hurdle is how dividing up the parts in this way almost runs contrary to other businesses creating multimedia platforms."
Mediaedge:cia broadcast account director Ross Nester says that advertising campaigns could still run across the Emap TV, radio and press units. But he warns there would need to be a '"clear policy of understanding" for the model to work.
Interesting questions
"RSVP (an ad network) allows buyers to buy space across IPC, GCap and Viacom, and that works well - so it wouldn't be the death of cross-media sales at Emap," he adds.
"But Emap is one of the most integrated media firms around, and if you look at products such as Heat magazine and Heat radio, the two go together. Dividing them up will pose some very interesting questions about how you manage both brands."
Panmure media analyst Alex de Groote would not be surprised if some of the smaller, less-established Emap brand extensions were shut down after the sell-off.
"The revenue raised from the digital channels is small. I can see brands like Heat Radio - probably making a loss now - breaking even or turning a profit of maybe £1m," he says.
"Where they are valuable is when they can offer existing magazine advertisers cross-media deals. But if, say, GCap wins the bid to buy Emap's radio assets, the prize is Magic and Kiss. Is it going to want digital channels anyway?"
EMAP BRAND EXTENSIONS
- Closer magazine, websites and planned digital radio station. Eventual owner of magazine is expected to control brand extensions
- Smash Hits website, Smash Hits TV and digital radio channel Smash Hits. Unclear who would control licence as print magazine no longer exists
- FHM magazine, website and FHM TV, which timeshares with and broadcasts on the same channel as Q TV. Eventual owner of magazine is expected to control brand extensions
- The Hits website, TV channel The Hits, digital radio station The Hits. Eventual owner of TV channel is expected to control brand extensions
- Heat magazine, website and digital radio station Heat Radio. Eventual owner of magazine expected to control brand extensions
- Kiss radio stations Kiss 100 London, Kiss 101 West and Kiss 105-108 East, website and Kiss TV. Eventual owner of radio station is expected to control brand extensions
- Kerrang! magazine, website, digital radio station Kerrang! Radio, Kerrang! 105.2FM and Kerrang! TV. Eventual owner of magazine is expected to control brand extensions
- Mojo magazine, website and digital radio station. Eventual owner of magazine is expected to control brand extensions
- Q magazine, website, digital radio station Q and Q TV. Eventual owner of magazine is expected to control brand extensions
- Magic Magic 105.4, Magic AM, Magic 828, Magic 999, Magic 1152, Piccadilly Magic 1152, Magic 1161, Magic 1170, Magic 1548, websites and Magic TV. Eventual owner of radio station is expected to control brand extensions.