The market is reacting positively to the $500 million sale of ACP Magazines to German publisher Bauer, with one analyst saying the price was astonishing.
However others are questioning whether the lack of a magazine arm will cause Nine to lose out on cross-platform advertising deals when competing against Seven, which owns Pacific Magazines and Yahoo7.
This is despite Nine saying advertising in the ACP titles under Bauer's ownership would continue to be sold by Nine's Powered cross-platform advertising sales arm, which includes the Nine Network and Ninemsn.
Cross-platform sales alliances have traditionally not carried as much weight as deals done by wholly-owned companies because of competition between the different owners for a greater share of the advertising dollars.
CCZ Equities analyst Roger Colman said the deal would "have a positive impact on Nine's financials in the short term" but might affect its ability to cross-sell advertising in the long term.
Others hailed the deal. "It's a f...ing great price for a structurally challenged magazine business,'' another analyst told Media.
"(Bauer) must have much more long-term aspirations and be willing to sit out the cycle.''
Nine Entertainment Company confirmed yesterday it had sold ACP Magazines to German publisher Bauer, with the price understood to be around the $500m mark.
The analyst, who spoke off the record, said the price might tempt other publicly listed media owners whose share price was suffering to sell magazine assets.
The advertising industry is widely expected to be flat at best for the next year or so, with print media advertising revenues likely to decline year-on-year.
"The shareholders of Seven West Media should be encouraged,'' the analyst said.
"If you can get a six to seven-times multiple for ACP, which has got some trade and low-margin custom publishing in there, it's very encouraging for Seven West, whose share price has been getting hammered.''
The share price of Seven West Media, whose assets include Pacific Magazines, has halved in the past six months: it was $1.32 a short time ago, down from over $3.70 in April.
Nick Chan, chief executive of Pacific Magazines, said any talk that PacMags could be sold off was "pure speculation".
He said the Bauer deal was a vote of confidence in magazines.
"I think the good thing is that an external party that knows (the industry) recognises the value of magazines," Mr Chan said.
Media buyer Harold Mitchell said it was a good deal for Nine, which will use it to reduce its $2.8 billion debt pile and avoid a covenant breach this month.
"It's a game-changer for the organisation,'' Mr Mitchell said, predicting NEC would work towards re-floating the business, which includes the Nine Network, 50 per cent of digital arm Ninemsn and other digital businesses, within three to five years.
"They now have some liquidity and some room to move,'' he said.
He said ACP Magazines, whose titles include The Australian Women's Weekly, Woman's Day, Harper's Bazaar, Cleo, Cosmopolitan and Zoo Weekly, would benefit from having a global owner.
"Magazines will always have a place but they need to continue to control costs," Mr Mitchell said. "A global organisation that is able to do this very efficiently makes a lot of sense.''
Mark McCraith, from media buying agency Maxus, said the deal represented the best of both worlds, giving ACP's titles access to a global parent company while allowing Nine to reduce its debt without losing a cross-platform advertising partner.
"All of the (media groups) have gone through the pain of integrating advertising sales," he said. "I would suspect (the sale to Bauer) is not going to make any difference."
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