With an estimated 29m UK households accessing TV listings through daily newspapers, free weekend supplements, celebrity and men's weeklies, the internet and EPGs (electronic programme guides), it is a wonder anyone needs to buy a TV listings magazine. Yet more than 5m people do so every week, representing one in five households. And despite the plethora of new ways of getting the information for free, over the past five years sales have actually increased.
TV listings is a lucrative, low-cost, high-income publishing business, and accounts for a large proportion of the profits of the three main contenders - IPC, H Bauer and BBC Magazines. So it is no surprise that newspaper giant Trinity Mirror's proposed entry into the market has caused something of a stir (Marketing, 2 February).
At the first whiff of the rumour, IPC reacted by slashing 10p from the price of its 1.6m-selling, market-leading title What's On TV, to 35p. H Bauer followed by cutting 10p from the cover price of TV Choice, to a new low of 30p. All this has had the BBC, publisher of Radio Times, complaining about unfair competition, even asserting, unfathomably, that consumers would lose out.
The eruption of a bloody price war seems to have disturbed Trinity Mirror's plans. The word is that it has had to rework its business model to reflect the cover price cuts. As a result, it is likely to miss out on a pre-Easter launch, and will have to wait until the next big TV season arrives in the autumn. It will hope that by then, IPC and Bauer may have counted the cost of their skirmish and adopted more prudent pricing levels.
Aggressive pricing
This may be a forlorn hope. IPC insists its price-cutting has less to do with Trinity Mirror and more to do with Bauer, with the long-term aim of curtailing its competitive threat to IPC in the crucial women's weeklies and TV listings markets. And in this, stress IPC executives, it has the backing of US parent Time Warner, and its huge financial muscle.
The aggressive approach to Bauer began last month when IPC launched Pick Me Up, a 'real life' weekly rival to Bauer's Take A Break and That's Life!.
Now IPC has trained its guns on Bauer's only other business sector, TV listings.
It is a fight that has been simmering since 1999, when Bauer launched the budget-priced TV Choice, forcing IPC to price-match by slashing What's On TV from 50p to 35p. The move severely hit IPC's profits, wiping out about 拢68m of revenue over the five years since.
Furthermore, What's On TV's sales lead over TV Choice is being eroded.
In the last ABCs, for January to June 2004, What's On TV was down 3.2% year on year, while TV Choice was up 11.9%. A similar result is expected in the next ABCs, due out on 17 February.
This trend has IPC extremely worried. According to its own long-term modelling, if What's On TV continues to sell at a 5p premium to TV Choice, its sales lead, currently about 500,000 copies, will be eliminated, with TV Choice overtaking What's On TV by 2008; hence the need to cut its price.
The loss of its market lead would not just hit circulation revenue, but the magazine's advertising revenue base would also suffer, perhaps drastically, according to Philippa Brown, managing director of IPCtx.
'What's On TV is a huge advertising earner. Most of its advertisers are response-driven, and if their response rates fall, so does our advertising,' she says.
Now IPC finds itself, frustratingly, back where it started before its price cut, with What's On TV still 5p dearer than TV Choice. It has to hope that Bauer cannot sustain a 30p price for long, or it will have to employ more of its parent's financial clout and cut further.
Sales impact
Brown admits that Bauer's pugnacious response took IPC by surprise. A price match at 35p was a more expected move. 'We didn't think they would go as low as 30p,' she says. 'They seem to think that being the cheapest in the market is some god-given right of theirs.'
She is not about to reveal what IPC's next move might be. First, she will wait to see what the sales impact of the price-cutting is, but she is bristling with intent. 'What's On TV is Time Inc's eighth most profitable title and we're not going to give up now,' says Brown. 'We have to take firm decisions based on the long-term picture.'
But Bauer seems prepared to fight fire with fire. It has contingency plans to meet any new pricing move by IPC, according to Julie Lavington, publishing director of Bauer's TV titles. 'TV Choice's brand proposition is to be the best-value TV listings magazine and we will do everything to protect that proposition,' she says.
Watching from the sidelines - for now, at least - is Sly Bailey, chief executive of Trinity Mirror. She made her reputation at her former employer, IPC, running the TV listings group, and few people understand the dynamics of the market better.
IPC and Bauer may be about to escalate the TV listings price battle to new bloody heights, but it is undoubtedly Bailey who has her hand poised over the nuclear destruct button.
DATA FILE
TV listings and guides
Title Jul-Dec 99 Jul-Dec 99 Jan- Jan- Year-
to Jan-Jun04 Jun 04 Jun 03 on-year
% change % change
What's On TV 1,741,157 -6.1 1,635,023 1,689,621 -3.2
Radio Times 1,337,036 -17.4 1,104,767 1,161,019 -4.8
TV Choice n/a n/a 1,082,654 967,807 11.9
TV Times 790,999 -40.2 473,379 529,632 -10.6
TV Quick 638,855 -44.5 354,620 394,251 -10.1
TV & Satellite Week 180,530 23.3 222,510 254,445 -12.6
Inside Soap 263,794 -30.9 182,161 247,699 -26.5
RTE Guide n/a n/a 106,213 113,687 -6.6
Total TV Guide n/a n/a 103,560 n/a n/a
Soaplife n/a n/a 90,581 115,071 -21.3
All About Soap 130,111 -32.2 88,197 106,049 -16.8
TV Now! n/a n/a 37,932 34,452 10.1
Total 5,082,482 9.9 5,481,597 5,613,733 -2.4
Source: ABC