Second-Round Bids Due Today on Time Inc. Titles (posted 1/22)

Sources: InterMedia Partners said to be in surprise lead for Time4Media assets.

Second-round bids are due today on the 18 titles Time Inc. is selling and sources say InterMedia Partners - the private equity firm that recently bought Primedia's hunting, fishing and shooting titles for $170 million - could be in the lead for Time4Media assets up for grabs. "They're definitely the ones to watch," one M&A source said.

Several companies are vying for the assets of Time Inc.'s Time4Media and Parenting groups, which were put on the market in September. Although Time Inc. hoped to have agreements in place for the sale of the assets by the end of the year, the deadline for final bids was twice delayed as the M&A firms involved in the process pushed the media giant for more information. "I don't think Time or its investment bankers (J.P. Morgan) did a particularly good job with this," said one source involved in the bidding process. "But, part of the problem, is that Time is not an experienced seller of assets. They've been more active on the buying side. And the bankers (J.P. Morgan) they're using are not specialists in this area."

Although it was initially believed that the Parenting Group and Time4Media would each go to separate buyers, sources now say Time Inc. may select as many as three buyers with Time4Media, which includes 14 titles such as Popular Science and Transworld Motorcross, split up between two buyers because many of the titles are seemingly unrelated.

Sources also say Time may not get the $250 million price tag it was hoping for. "I expect they'll get $200 million for everything (Parenting and Time4Media combined)," said one source. "They'll probably get $100 million or even below for the Time4Media group (alone)."

In addition to InterMedia Partners, the other companies involved in the bidding include fast growing enthusiast media companies, Active Interest Media and Apprise Media; as well as Bonnier, CurtCo; G+J USA head Russell Denson, who is backed by Kelso & Co. and VSS; former Time Inc. executive vice president Jack Haire; Bono, Roger McNamee and their company, Elevation Partners, which recently bought a stake in Forbes; Knot CEO David Liu, who is believed to be bidding on the Parenting titels; Falconhead Capital; and Quadrangle Group's Steve Rattner and Peter Ezersky, who are backing former Wenner Media executive Kent Brownridge. At least two of these bidders are believed to have dropped out in recent weeks, a source said.

InterMedia Takes the Lead
Two M&A sources last week said InterMedia Partners, the private equity firm run by Leo Hindery, who founded the YES network and served as its chairman and CEO until May 2004, is a favorite to take the Time4Media titles, which include enthusiast titles such as Popular Science, Field & Stream, Outdoor Life, Motorboating, Yachting, Ski and Warren Miller Entertainment. "There were several in the running, but they look like the winners," said one M&A source.

InterMedia Partners was established in 1988 and spent much of its existence investing in and starting cable television, radio, Internet and consumer event holdings. Its first foray into publishing seems to have come with its $170 million purchase of the fishing, shooting and hunting assets of Primedia's outdoors group in December.

Although two sources say InterMedia is in the lead for the Time4Media properties, another source said it may not be. "Part of their goal is to provide content for their cable channel, OLN (Outdoor Life Network)," the source said. "It is unknown whether the PRIMEDIA purchase will make InterMedia more or less likely to be active in the T4M process."

"It's been a challenging process for all involved."
News of Time Inc.'s intention to sell off two of its publishing groups was met with great fanfare (more than 90 copies of the offering memorandum were requested by potential buyers following the announcement of the sale).

But the bidding process hit a sour note after it was revealed that many of the titles were in decline. 2006 Ad revenue figures from the Publishers Information Bureau shows that all but two of the Time4Media titles, Transworld Motorcross and Transworld Surf, suffered declines last year, and both Parenting titles were down. "It's been a challenging process for all involved," said one source. "Pricing has been challenging. It was disappointing that a greater understanding of these titles financial performance was not allocated to the black books, particularly as it relates to Time Inc.'s contribution to these titles."

On the bright side, online advertising revenue grew 60 percent overall at the Time4Media division last year and grew by 24 percent in 2005. Also, the division's page views were up 70 percent in 2006 compared to 2005 and unique page views were up 60 percent, according to information obtained from Time4Media.

Still, bidders say neither Time4Media, nor the Parenting Group, are far enough along in their online efforts to offset the losses in print dollars. "Tom Beusse (Time4Media president) came on in early 2006 and he brought in a very capable guy (Todd Unger) to head up the division's digital initiatives," said a source. "And they had all these plans and initiatives, but then they found out that their company was being sold out from under them."

Other sources say Time Inc. never made the investment in Time4Media's and Parenting's digital holdings. "If you have Surf magazine and Field & Stream competing with People magazine for online resources, who do you think is going to get them?" said a source, adding, "They have the plans and the ambition to really do some good things on the digital side, they just haven't had the opportunity to carry them out."

2005 PIB revenue (in millions)
Time4Media titles:
Golf Magazine-$174.8, -2.3%
Field and Stream-$74.6, -7%
Outdoor Life-$29.9, -4.7%
Popular Science-$76, -6.5
Ski-$40.2, -14.7%
Ride BMX-$6.5, -5.4%
Skiing-$21.8, -11.4%
This Old House-$50.4, -17.5%
Transworld Skateboarding-$31.9, -10.9%
Transworld Snowboarding-$15.6, -26.8%
Transworld Surf-$11.3, +8.6%
Motorboating-$23.8
Salt Water Sportsman-$27.1, -5.9
Transworld Motocross-$14.2, +84.5%

Parenting Group:
Babytalk - $70.4, -5.8%
Parenting - $169, -14.8%

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