Primedia may be hitting a bit of a downdraft in the prospective price it may get from buyers for its Enthusiast Magazines unit, the last and largest of the pieces it is selling as part of its two-year-long divestment process.
A source with knowledge of the process said that while the requirement for getting into the second round was a bid of over a billion dollars, prospective offers are now dropping below that mark as bidders review the specifics of the business.
The enthusiast-magazine division, which includes 70 publications, 90 Web sites and over 65 events, had revenue of over $500 million in 2006, excluding its recently divested Outdoors Group. The unit includes some of the company’s best-known brands, including Motor Trend, Automobile, Hot Rod, Automotive.com, Power and Motoryacht and Surfer.
It had 2006 EBITDA of about $100 million.
"Healthy margins can be the result of either growth and good flow-through, or because someone has been cutting costs and not making the investments for long-term growth," the source said. "The perception is that the company may not have been making investments in the online side that they should have."
Bidders are reported to include Elevation Partners, Quadrangle Group, and more recently, CurtCo Robb Media has been named in published reports.