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Five months after selling off 17 leisure titles to New York buyout shop InterMedia Partners LP, Primedia Inc. has made a significant divestiture—its Enthusiast Media division, which includes more than 70 publications—from Motor Trend to Soap Opera Digest—90 Web sites and 65 events that collectively saw $500 million+ in revenue in 2006. Primedia unloaded the pubs to Source Interlink Cos. in an all-cash deal worth nearly $1.2 billion. The buyer, a media distributor, could also set its sights on a takeover of American Media Inc., beyond just the five titles the company put on the block in June 2006, The Deal's Richard Morgan points out.
Meanwhile, the CEO of British publisher Emap plc abruptly resigned May 17 further raising expectations the publisher could be sold.
BUYING AND SELLING Primedia revealed Feb. 9 the unit was on the block and first-round bids came due March 16 and the lot was thought likely to fetch about $1 billion. The PEM news came two months after Primedia unveiled plans to sell 17 of its leisure titles to New York private equity firm InterMedia Partners LP for $170 million. The company unloaded its hunting, fishing and shooting titles to InterMedia Outdoor, Inc., to focus on its core products, and continue to target the 18- to 34-year-old male reader, Dean Nelson, its chairman, president and chief executive said in a statement. It's the latest move for a company Morgan has called Primedia "the greatest M&A machine in magazines." In 2006, the publisher's divestiture ring was steady. Earlier in 2006, Primedia hired Goldman to sell its crafts publications unit, which generated revenue of $60 million in 2005. Nine months later, the company sold titles including Creating Keepsakes, McCall's Quilting, Sew News, Simple Scrapbooks and Step by Step Beads, and related assets to Sandler Capital portfolio company Enthusiast Media LLC for up to $132 million, and other craft titles to a unit of Aspire Media LLC, a Loveland, Colo., enthusiast media outfit backed by Chicago's Frontenac Co. and Catalyst Investors of New York. Shedding titles, it certainly isn't alone. GONE SHOPPING After nearly a year of speculation, Dennis Publishing Inc. announced in February that it is shopping its Maxim—including its 31 international editions—Blender and Stuff titles. The lot, which likely includes the publisher's brand extensions, but excludes newsweekly aptly named The Week, could go for between $400 million and $500 million, sources told The Deal's Richard Morgan. In a similar move to cling to its strongest titles and trim those that it deems ancillary, Time Warner Inc. announced Jan. 25 it had sold a slate of 18 Time Inc. magazines to Stockholm-based Bonnier AB's magazine group for what sources told The Deal was between $200 million and $250 million. The deal makes the buyer one of the largest consumer publishers in the U.S., it said, coupling its newest titles with its World Publications' travel and leisure magazines. Time put the niche publications on the block in September and second round bids were due Jan. 22. The titles to change hands include: Skiing, MotorBoating & Yachting, Popular Science and Field & Stream, as well as 11 others that Time acquired through a $475 million deal with Tribune Co. (For more on Tribune, see a related Dealwatch.)
The company plans, instead, to focus on its biggest brands, Reuters said. According to a Mediaweek piece in September when the auction was announced, the titles to be divested don't fit with the overall strategy at the publishing group—to compete efficiently, chief executive Ann Moore has been shutting down titles, like Teen People in August, and trimming staff, including 550 employees, some high-level, in the last year. In keeping with the "big-media mentality," the company hired "big bank" J.P. Morgan Chase & Co. to advise on the sale. At the time, some sources raised questions about the logic in doing so instead of turning to boutique media bankers. Once source told The Deal that after an initial meeting, the J.P. Morgan bankers were "collectively puzzled by the peculiarities of valuing publishing assets." TIME AFTER TIME Others engaged in title slim-downs include AMI, which announced plans in June to shop body building and fitness titles Flex, Muscle & Fitness and Muscle & Fitness Hers, as well as Spanish-language publication Mira! and country music magazine Country Weekly. The news came months after the company stopped publishing Spanish-language fitness magazine Shape en Espanol, MPH Magazine, which focuses on car racing, and gossip glossy Celebrity Living.
In a weekly column in September, Morgan summed up "The entertainment simplex" surrounding such companies with one thought: "The trend among media companies is to define what they are divest what they are not." And in doing so, they hope to make the right bets. RICH UNDERTONES OF PRIVATE EQUITY And when these assets have gone up for grabs, private equity firms have been quick to take note.
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