Could Bono Save AMI?
With no sale in sight, CEO David Pecker hints at search for capital.
NEW YORK‚ÄĒWith a long-rumored sale to Source Interlink seemingly ground to a halt, American Media Inc. chairman and CEO David Pecker says he‚Äôs looking at all options‚ÄĒincluding an influx of capital similar to what Elevation Partners, the $1.8 billion investment company backed by Bono, the U2 singer, gave Forbes in 2006.
‚ÄúI would do that in a heartbeat,‚ÄĚ Pecker said during wide-ranging talk at a Magazine Publishers of America breakfast in New York this morning. But Pecker declined to say if he was in sale or financing talks with any private equity firms, or to give an update on the publicly proposed sale of Weider Publications, the company he bought in 2002. (Pecker now considers the $350 million acquisition his ‚Äúbiggest success.‚ÄĚ ‚ÄúPeople said ‚ÄėDavid overpaid.‚Äô We didn‚Äôt. You get what you pay for.‚ÄĚ)
For the moment, Pecker is focused on improving AMI‚Äôs financial footing while building out an events business. He pointed to the successful launch of Men‚Äôs Fitness‚Äô Ultimate Athlete, a ‚Äúseven-figure‚ÄĚ event held in Central Park earlier this year, as a prototype for consumer publishers to follow. (Pecker says he‚Äôs in discussions with a television producer to take the event on a ‚Äúfive-to-ten city tour‚ÄĚ culminating in a television special.)
For the National Enquirer and Star, a brand expansion to television would ‚Äúabsolutely require a partner,‚ÄĚ similar to what TMZ.com has done in the celebrity space. Television, Pecker said, is ‚Äúvery expensive.‚ÄĚ
Pecker, former CEO at Hachette, also said publishers should at least begin to consider product placement as an untapped revenue stream, although, he said, AMI has ‚Äúnever had that conversation‚ÄĚ with marketers and wouldn‚Äôt want to ‚Äúoverpromise‚ÄĚ without being able to deliver such editorial.
Was Bonnie Fuller Worth $2 Million a Year?
When asked directly whether Bonnie Fuller‚ÄĒthe high-profile editor of Star who last week announced she would resign from AMI‚ÄĒwas worth her $2 million annual salary, Pecker said he had no regrets hiring Fuller away from Wenner Media's Us Weekly. ‚ÄúLooking at the competitive set, I thought it was a perfect investment to make.‚ÄĚ
‚ÄúStar was a 60-page tabloid selling on roto-paper,‚ÄĚ he continued. ‚ÄúNobody has ever changed a 60-page tabloid into a 100-page glossy magazine." Pecker added: ‚ÄúI can't think of anyone I know who's more capable and worth more dollars than her to create shareholder value for that magazine.‚ÄĚ
What Pecker does regret, he said, was moving the National Enquirer from Florida to New York and hiring an entirely new staff from London to run the magazine. When it didn‚Äôt work out, he said, ‚ÄúI had to rehire the people I had let go.‚ÄĚ
While Pecker sees more consolidation coming in the industry‚ÄĒthe retailers are going to make that happen‚ÄĒhe doesn‚Äôt see it happening in the celebrity category. But, he warned, wholesalers are ‚Äúgetting hit hard‚ÄĚ with fuel costs, and are moving to less deliveries per week, something that will hurt magazines with weekly distribution. ‚ÄúThey‚Äôre going to say ‚ÄėYou get the product there yourself.‚Äô‚ÄĚ
MORE COVERAGE: Fuller's Boss on Whether She Was Worth It [Portfolio]