View from City Road: Emap's French affair may be bittersweet

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The Independent Online
All that D-Day coverage must have gone to Emap's head. The publishing group is off to France in a brave attempt to establish its first overseas beachhead on the other side of the Channel.

Like the original Normandy landings, its invasion will not come cheap: the purchase of the Editions Mondiales group, plus an assortment of loss-making magazines, will cost pounds 108m, an eye-catching multiple of more than 50 times earnings.

Emap declares itself completely confident about its ability to handle what will be both its first significant foreign expansion and an important deal for the group - the purchase will virtually double the size of its consumer magazine division, and will boost group turnover by more than a third.

But coming as it does on top of plans to diversify further by almost doubling its radio interests via a pounds 70m bid for Trans World Communications, investors have reasonable grounds to feel less sanguine. Many are the expansion hopes of previously confident British companies that lie buried in a corner of a foreign field.

In its defence Emap argues, with some justification, that this is an ideal time to buy into the French market, since the economy, about a year behind the UK, is beginning to recover strongly. As well as economies of scale, rising advertising revenues will flow straight through to the bottom line.

It also points out that the minuscule profit margins - less than 1 per cent - earned by the French titles compare dismally with its own 14 per cent margins. The idea is that the magic touch of Emap's strict cost control methods, combined with its journalistic flair, will enable it to repeat the profit performance it has achieved with other acquisitions, such as the Thomson Publishing business titles.

Admittedly Emap has had some experience of Gallic practices - it publishes two successful titles in France and is involved in two joint ventures with French companies from which it has gained valuable experience. But that looks tiny compared with the 38 troubled titles it is now buying.

And it is scarcely an accident that Robin Miller, Emap's chief executive, is stumped for an example of a British publisher that has made it big Over There.

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