Primedia to Classify Its Education Segment as 'Discontinued' in the Fourth Quarter (posted 12/20)
Primedia said Wednesday in a filing with the Securities and Exchange Commission that it would classify its education segment as a "discontinued operation in the fourth quarter" while its explores strategic options for the assets of the segment. The company did not say what the strategic options would entail, but industry sources have speculated in recent weeks that Primedia is looking to sell the segment.
If the segment is eventually sold off, it would be the fourth in a string of transactions the company has undertaken over the past year in an effort to reposition itself. The company agreed to sell its crafts group to Enthusiast Media LLC, an entity controlled by affiliates of Sandler Capital Management, in June for $132 million. In September, the company said it would sell its gems group to Interweave Press. And, this month, Primedia announced plans to sell the hunting, fishing and shooting assets from its outdoors group to Intermedia Partners for $170 million.
In November, Primedia lowered its 2006 earnings guidance citing a "worse than expected 2006 selling season" in its education segment's Channel One public schools television network. In addition to Channel One, the education segment consists of the Films Media Group, a source for educational videos; and Primedia Healthcare, a medical education business.
In Wednesday's SEC filing, Primedia reduced segment EBITDA guidance for its enthusiast media group from low single-digit percentage growth to a flat to low single-digit decline, reflecting the sale to InterMedia Partners. But the company also raised its overall guidance from flat to low single-digit growth reflecting the positive impact it expects from the discontinuation of its education segment.
The guidance includes about $5 million of non-recurring expenses related to assessing the spin-off of its consumer guides segment, which is planned for the first quarter of next year. The company has said the spin-off of the guides group into a separate business will increase share-holder value.
In the third quarter of this year, the company posted total revenues of $254 million, compared to $246 million in the same period a year ago, a 2.9 percent increase. EBITDA was $46.5 million for the third quarter, up from $42.2 million last year, a gain of 10.2 percent.
The company's net income nose-dived in the third quarter to $53.8 milllion, down from $207.8 million in the third quarter of 2005. The drop was attributed to gains the company had in the third quarter of last year due to the sale of About Inc. and its Business Information segment.