FOLIO: Section Blogs by M and A and Finance

Have You Noticed? There's Been a Flurry of Magazine M&A

Bill Mickey — Tue, 24 Jan 2012 16:09:46 -0500

More than a few magazine and media executives spent the holidays putting the finishing touches on deal closures. We're only 3 weeks into January and there's been a flurry of M&A action—from decently big deals to small.

Here's a recap:

Today of course Meredith announced it's buying Allrecipes.com from Reader's Digest Association, advancing a deep dive strategy into the food vertical as fast as RDA is pulling away from it, having also bought Everyday With Rachael Ray from them. The deal closely followed Meredith's acquisition of FamilyFun from Disney Publishing earlier in the month.

Harry Stagnito has sold Stagnito Media to private equity firm Topspin LBO, which also owns his son's Vermont-based Moose River Media. The deal, says Stagnito, will allow the company to build out its marketing services and data and information products.

Edwin V. Avent's Heart & Soul magazine has been sold to a group of investors called Brown Curry Detry Taylor & Associates. BCDT's principals all have direct ties to the magazine, having worked for it in one capacity or another.

Hanley Wood is now owned by Oaktree Capital Management, Strategic Value Partners and Tennenbaum Capital Partners after going through a major recapitalization, cutting its debt from $410 million to $80 million.

In a retreat from the U.S. market, Future plc sold its U.S. group's Music Division, including 3 magazines, to NewBay Media for $3 million. Revenues for the group in Future's fiscal 2011 were about $13 million.

Grand View Media has taken over management of Shooting Sports Retailer magazine. While not technically a sale, Grand View may have an option to buy after a certain period of time and certain performance goals are met.

F+W Media is expanding its food vertical coverage, too. It bought World Tea Media, which produces the World Tea Expo as well as associated editorial products.

Vibe Holdings has been merged with BlackBook Media and Access Network, forming Vibe Media. The combined entity will be owned by the Yucaipa Johnson Fund, backed by Ron Burkle and Earvin "Magic" Johnson, and InterMedia Partners.

Bangor Metro, a regional magazine serving the Bangor, Maine region, has been sold to Cashman Asset Management.

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What a Facebook IPO Could Mean For Publishers

sbotelho — Thu, 01 Dec 2011 14:09:48 -0500

As you probably already know, if Facebook were a country it would be the third largest country in the world, more than double the size of the United States, with more than 800 million active monthly users. News circulated across the globe Tuesday that the company is seeking $10 billion in its initial public offering [IPO]. This could have huge ramifications for the media industry.

If Facebook were able to raise the $10 billion for its initial public offering (personally, I don’t think it would be hard for them to do that), the total amount of the company’s value would be boosted to around $100 billion, with about $10 billion in shares backed by equity to be circulated through the corporate casino known as the stock market.

That number represents about four times what Google’s IPO was just 7 years ago.

This news is particularly valuable for the media industry—as the company goes public, there are more avenues for media companies themselves to get a piece of the medium that so much of their content is distributed through and where so many of their loyal consumers are waiting for them.

When a company enters into the public sphere, making internal changes becomes more difficult, something that could prove beneficial for professionals working at publications. Right now, it seems that every six to eight weeks Facebook rolls out new changes to its interface and format. With slower changes, media professionals can better study and adapt to the interface, allowing for optimized content distribution and consumer interaction.

While stricter limitations on changes could bode well for media, it could also cause the platform to become obsolete: the innovation and ingenuity that has made Facebook so popular could be stifled by the views of shareholders, causing users to migrate. While that seems unlikely, think of MySpace. When something more interesting, like Facebook, came along, users jumped ship.

Tech Crunch’s Josh Constine makes an excellent point in his most recent post on the subject.

“In addition to aggressively advancing monetization, stockholders could rail against the product’s evolution,” he writes. “Changes that disrupt user behavior and ask people to be more open might cause temporary stock price dips they don’t want. Instead, they could turn Facebook into Microsoft, slowing innovation and making it vulnerable to more agile competitors.”

One disruption Constine mentions, and this reporter remembers, is when the newsfeed feature was implemented in 2006. There was outcry from those that used the site, something that individuals now actively engage with. A new set of changes that are initially rejected by the 800 million (and growing) users could cause the market to take a big hit, and cause stock holders to scale back changes that may have been just what the public was waiting for, but didn’t know it.
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Publishers Come Out of Bankruptcy Eager To Buy

Matt Kinsman — Thu, 20 Jan 2011 15:06:09 -0500

Isn't this what got so many publishers in trouble in the first place?
AMI, which just came out of bankruptcy last month, has $50 million in free cash primed for acquisitions, with Maxim at the top of the list, according to WWD.

Penton Media CEO Sharon Rowlands, who brought the b-to-b publisher out of bankruptcy in March 2010, told FOLIO: that last month's acquisition of Nation's Restaurant News could be just the start of several new acquisitions, including print, events, digital and data assets across a variety of markets, particularly deals that help bolster Penton's business in China.

On the one hand, this is could be great news. A vibrant deal market (now that we seem to be moving away from distressed deals as the only game in town) speaks to the gradual recovery of the media industry. Publishers (and executives) emerging from Chapter 11 and crushing debt loads feel like they have a new lease on life and are eager to vindicate their brands with big moves and fast growth and execute on some of that much-needed change everyone always talks about.

On the other, how much of this is blowhardery from people who haven't learned a hard lesson?

Let's just hope it doesn't spark another round of wheeling and dealing and dangerously unrealistic covenants if publishers start seeking private equity financing again (although who knows if it will be available-a recent report from media banker AdMedia Partners said just 48 percent of financial buyers are interested in b-to-media and even less--38 percent--are interested in traditional consumer media). Those feelings may be mutual--just 33 percent of content companies said they're looking for investment funding, according to AdMedia.
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Canon CEO Says $287 Million Buyout Enough to Turn a Profit

Mon, 20 Sep 2010 10:31:14 -0400

When London-based United Business Media announced late last week that it had acquired Canon Communications, one of the initial questions that came to mind was whether the $287 million price tag—while significantly larger than any other deal in b-to-b publishing since before the economic downturn—was in fact enough for owner Apprise Media and private equity investor Spectrum Equity Investors to turn a profit.

Backed by Spectrum, Apprise acquired Canon from fellow media industry private equity firm Veronis Suhler Stevenson in 2005 for approximately $200 million. But make no mistake: the Canon that was acquired in 2005 by no means was the same company that was purchased by UBM. I drilled back through Canon’s slew of press releases over the years to refresh my memory about the company’s aggressive buying spree starting in 2006. [See a timeline of acquisitions below.]

So, will the $287 million acquisition price be enough to cover the initial investment plus all the acquisitions, and still have some left over for profit? “It’s likely that Canon was going to need to restructure its balance sheet due to debt, and was faced with restructure or selling,” one CEO tells me. “It’s highly unusual for any media company to sell into this market unless they have to. My guess is that the deal price covered the various acquisition investments, and other investments made in the business, but that there was not much profit left for its owners.”

Not so, says Canon chairman and CEO Charles G. McCurdy. “Canon's loan facilities were set up in May 2005 at the original Spectrum/Apprise acquisition, and are set to mature in May, 2011,” McCurdy explains over e-mail. “We have brought our leverage ratio (the ratio of total debt to EBITDA) from over 7x at the outset to under 4.5x now by growing earnings and paying down principal. We were on a path last June to fully pay off Canon's old debt facilities with new borrowings when UBM made their approach.”

While under private management, Canon never released any specific performance details but did issue a pair of statements announcing revenue growth. In November 2007, the company said revenue for the fiscal year ended September 30, 2007 increased 22 percent and that EBITDA grew 34 percent, compared to the same period the prior year. Canon’s fiscal year ended September 30, 2008 saw revenue jump 23 percent over 2007. At the time, the company attributed its growth to its strategic acquisitions and operational growth.

UBM said that in the 12-month period ended June 30, Canon generated $106 million in revenues and $37 million in EBITDA on a pro forma basis. Apprise acquired Canon in 2005 for approximately $200 million.

McCurdy tells me Canon worked on parallel paths—preparing for new financing while also negotiating with UBM through the summer, until the deal was completed last week. He says Spectrum is “making a profit on their Canon investment.”

And another thing is for certain: After reporting on countless small multiple, fire sale-type sell offs in trade publishing over the last several months, it is important to note that this deal is the biggest we’ve seen in quite some time.

“This stands in contrast to the very disappointing investment results many have seen in the media sector in recent years, including the business-to-business sector, and the whole Canon organization is very proud of that outcome,” McCurdy says. “UBM is buying a company with a great team, strong momentum and many avenues of growth in place.”

"The most significant thing," says another b-to-b industry CEO, "is that Canon and the Access Intelligence deal are the first two significant b-to-b media deals completed in the last two years that were not distressed transactions. These are strategic deals for high quality b-to-b media assets at more normalized multiples: not at the 10x plus of the market high but at high single digits (7-9x EBITDA) which are much better pricing than the distressed (Reed, Nielsen, etc.) deals that were completed during the last 12 to 18 months."

Canon’s Announced Acquisitions Since 2005:

March 1, 2006: Acquired Octo Media Ltd, a London-based trade magazine publisher (including Medical Device Technology magazine) and event organizer.

May 10, 2006: Agreement to acquire eight trade shows and one magazine dedicated to the U.S. advanced, technology-based manufacturing sectors from Reed Elsevier.

September 4, 2007: Acquired Engel Publishing Partners from Euromoney Institutional Investor PLC.

October 9, 2007: Purchased two leading trade shows in Germany, INTERPART and SURFACTS, as part of its expansion in the European market.

February 6, 2008: Bought the Pharmapack trade show from French organizer Oriex (Organization of International Congresses and Exhibitions).

May 6, 2008: Acquired Stamping-Days, a biannual exhibition serving the high precision stamping technology industry in Germany.

February 16, 2010: Purchased the worldwide assets of Electronic Design News (EDN), Design News, Test & Measurement World, and Packaging Digest from Reed Business Information.

May 3, 2010: Acquired Pharmalot, a blog focused on news and information in the pharmaceutical industry.
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Potential Arab Bidder ‘Ignored’ in Newsweek Auction

Thu, 05 Aug 2010 08:51:00 -0400

When The Washington Post Co. announced in May that it was putting Newsweek on the block the story obviously stirred up a lot of attention all around the world. The following day, I wrote a post here speculating who might wind up buying the ailing magazine. In response to that, I received an e-mail from a man named Abdulsalam Haykal, a technology entrepreneur who serves as CEO of a Syria-based company called Haykal Media. In the e-mail, Haykal talked about the growing potential of media in the Middle East and said he was pulling together a coalition of investors to put a bid on Newsweek.

It was an interesting e-mail, although I didn’t think much more of it until late last month when the rumors about a buyer started heating up again. I asked if he was successful in placing a bid for Newsweek. He finally got back to me last night and said that although he did attempt to place a bid, his e-mail proposal to the Washington Post Co. went unanswered.

Whether or not you or I think that a Middle Eastern media company should or shouldn’t own an American icon like Newsweek, Haykal’s response was interesting in that Middle Eastern media is growing fast and is looking to make a bigger name for itself. Here’s the majority of Haykal’s message, reprinted with his permission:
In fact, we tried again, with the help of a friend, who is a well-respected American diplomat who has access to [Newsweek senior writer] Elizabeth Weymouth. He passed me the details of two people at Allen Co., and I emailed them but got no reply. It's not strange, as Newsweek is a "national treasure" like Harman said. Our aim in Haykal Media, and that of the group of investors with me, was to help the Arab Middle East have a voice in international media, contributing to a more balanced perspective in the world. Also, the media market in the Middle East is growing fast, and international media companies are eying the region. It was a perfect moment for us to think of this opportunity, and the risk seemed justified. However, I expected with a reasonable amount of sympathy that the Washington Post wouldn't sell to a non-American group, let alone an Arab group led by a Syrian media company. It will sound like selling Aljazeera to Fox News. But it would have been nice for them to get back to me, with a diplomatic or a blunt answer, but I got neither.
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Bidders Speak Out on Newsweek Sale

Mon, 02 Aug 2010 22:44:23 -0400

A month after final bids were due, the Washington Post Co. announced Monday that 91-year-old Sidney Harman, the founder and chairman emeritus of Harman International, has acquired Newsweek magazine.

“Newsweek is a national treasure,” Harman says in the announcement. “I am enormously pleased to be succeeding The Washington Post Company and the Graham family and look forward to this great journalistic, business and technological challenge.”

But Harman isn’t the only player who sounded off about the deal. I reached out to fellow bidder Fred Drasner (a former partner of Mort Zuckerman who helped negotiate his deals for the Daily News, Atlantic Monthly and Fast Company) and received a statement from Andrew Nikou, CEO of OpenGate Capital, the investment firm that in October 2008 purchased TV Guide from Macrovision for only $1.

Here’s what they had to say about the auction process.
Fred Drasner:

"The auction process worked—Newsweek went to the highest bidder. I offer congratulations to Mr. Harman. He paid a very full price and I think it is wonderful that he has made such a strong commitment to serious journalism, a species that I fear is becoming extinct in this country. I wish him the best of luck."

On why he thought he had the best proposal:

"In two words: Alan Webber and Paul Ingrassia. We shared both an editorial and business vision of what needed to be done to resuscitate the franchise. I believed I had the best shot because I had seen the movie twice. Once with US News and once with the Daily News."

Andrew Nikou, founder and CEO, OpenGate Capital:

“OpenGate Capital made a significant bid for Newsweek and we felt we had a great strategy and plan for the magazine. Our transaction team, led by Jack Kliger, envisioned a strong Newsweek in the years to come and we regret that we won’t have the opportunity to take this iconic brand into the future. OpenGate has had great success with the TV Guide Magazine brand and many other properties, and we had great confidence that we would have had similar success and many achievements with Newsweek. We greatly appreciated the interest by Donald Graham and his management team at The Washington Post Company, as well as the team at Allen & Company, and we wish them tremendous success with the sale of their distinguished property.”
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Maintaining Status Quo Will Spell Disaster for Newsweek

Fri, 30 Jul 2010 14:58:06 -0400

Bids to acquire ailing Newsweek magazine were due at 5 p.m. on July 1. A month later, parent company the Washington Post Co. is still mum on the process and on who might wind up taking the magazine home.

Recent scuttlebutt, however, points to a couple interesting developments. The Wall Street Journal reported today that the Washington Post Co. isn’t interested in selling to bidder Avenue Capital Group over concerns with the hedge fund’s proposal to partner with National Enquirer publisher American Media Inc. to handle some of the behind-the-scenes operations at Newsweek. (AMI recently struck up a similar deal with Playboy.) The worry among Washington Post Co. brass, according to the report, is that AMI might try to impart some of its “sensationalist” journalism into Newsweek.

The second comes from The New York Times, which is reporting that, according to three people “with knowledge of the bidding process,” the offer from audio equipment magnate Sydney Harman is pulling ahead as the favorite, especially with Washington Post Co. chairman Donald E. Graham. Under Harman’s proposal, the majority of Newsweek’s top management and editors would keep their jobs. From the NYT: “One person briefed on the bid said Mr. Harman would retain 250 employees [of Newsweek’s current staff of 325] and pay the Post Company $1 in exchange for taking on Newsweek’s considerable financial liabilities. Losses at the magazine could approach $70 million this year, this person said.”

We all know this type of deal is possible, after OpenGate Capital’s October 2008 acquisition of TV Guide from Macrovision for only $1 (in fact, Macrovision loaned the Beverly Hills, California-based investment firm up to $9.5 billion, at 3 percent interest, to help fund the acquisition and get the troubled magazine off its hands). But, as the NYT story points out, Harman’s deal is in effect appealing to Graham and the Washington Post Co. because it is undisruptive to the magazine’s current operation. It says the management team is worried that another bidder, Fred Drasner—a former partner of Mort Zuckerman who helped negotiate his deals for the Daily News, Atlantic Monthly and Fast Company—would “cut the staff too deeply” and make other changes. (I’m told Drasner wants Newsweek to have top notch reporting and journalism, and to upgrade the digital side, all while finding a market for it so the brand can gain readership and advertising.)

But isn’t change exactly what Newsweek needs? For an epic brand that has struggled in print editorially as a newsweekly and is working toward $70 million in losses before the end of the year, maintaining status quo would be a disaster. Perhaps Harman will tap into his millions to eat up those losses and prop up the magazine, but for how long?

Let’s not forget that publishing a magazine goes beyond providing a service or being some sort of trophy asset. It’s about making money. Newsweek is a business and its model is failing.

I’m not advocating any one deal or bidder over the other. I haven’t spoken directly with Harman or Drasner or any other bidder. What I am saying is that the Washington Post Co. should give serious consideration to who might give the magazine the strongest opportunity for future success. Most people don't enjoy laying off longtime, dedicated employees, but finding a new, operable model for Newsweek might be the bigger priority.
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Hefner: ‘I’m Buying, Not Selling’

Wed, 14 Jul 2010 11:00:43 -0400

UPDATE: Penthouse Owner Offers $210M for Playboy

Apparently Hugh Hefner’s announcement this week that he wants to take Playboy Enterprises private—and the media swarm that followed—has the Playboy founder on the defensive. If not about the offer itself or if it is substantially below the fair market value for the company, then definitely about other parties stepping forward to place their own bids.

Shortly after Hefner announced his proposal to purchase all of Playboy’s outstanding shares of Class A and Class B common stock for $5.50 per share (he already owns 69.5 percent of its Class A and 27.7 of its Class B stock), I spoke with Marc Bell, CEO of Penthouse magazine owner FriendFinder Networks. He didn’t offer up many details but said he expected FriendFinder to submit a bid for Playboy “within the next few days.” (An e-mail came in as I was writing this saying FriendFinder will go public with its proposal for Playboy at 12:30 p.m. on Thursday. It has retained Imperial Capital, LLC as financial advisor for the process.)

According to Hefner, Bell shouldn’t even bother. In a second announcement, which hit news wires Tuesday afternoon, Hefner reasserted that he believes his offer “is in the best interest of the company.” Over Twitter, he (or whoever tweets for him, under his handle) also reaffirmed that he is not interested in any sale or merger of PEI, selling his shares to any third party or entering into discussions with any other financial sponsor. Here are his tweets, in chronological order:
@hughhefner: Penthouse is just looking for publicity. They're not in the picture.

@hughhefner: My interest in taking Playboy private is prompting some crazy rumors. Playboy isn't in play. I'm buying, not selling.

@hughhefner: I'm concerned about our minority stock holders & the future of the magazine & the brand.

@hughhefner: I support my management team & think we're on the road to recovery. Going private should help.
Hef could in fact block selling Playboy to other potential buyers. If bids do roll in at a value greater than Hef’s then the company’s board of directors would most likely put pressure on him. But would it make a difference? If he’s as steadfast as he says he is, any other deal wouldn’t go through without his consent to sell his stake.

Here’s the entire text of Hefner’s proposal:
July 8, 2010

Board of Directors
Playboy Enterprises, Inc.
680 North Lake Shore Drive
Chicago, IL 60611

Attention: David Chemerow

Gentlemen:

I am writing to you to inform you that I am interested in negotiating a transaction with our company to acquire all of the outstanding shares of Class A and Class B Common Stock of PEI that I do not currently beneficially own. In this transaction, I intend to partner with Rizvi Traverse Management LLC (“Rizvi Traverse”). Rizvi Traverse is a private equity firm with a special focus on the entertainment and media sector. Rizvi Traverse currently owns or has investments in International Creative Management, Summit Entertainment, Newbridge Capital and Clearscope Partners. Rizvi Traverse can bring significant resources to our company to help accelerate its growth.

Given my many relationships with our company – founder, editor-in-chief, chief creative officer, holder of 69.5% of the outstanding voting Class A common stock and 33.7% of the total outstanding shares of capital stock, I expect that a Special Committee of the Board of Directors will be formed to consider this transaction. I look forward to working with the Special Committee to move this transaction forward as expeditiously as possible.

I believe this proposal is in the best interests of our company and its minority stockholders. The proposal provides an excellent opportunity for the minority stockholders of PEI to realize liquidity for their shares at a significant premium to market values. I believe the proposal will also reinvigorate the company I founded and create a lasting legacy for the Playboy brand, a brand we have all worked hard to establish as one of the most widely recognized and popular brands in the world.

Please be advised that out of my concerns for amongst other matters the Playboy brand, the editorial direction of the magazine and our company’s legacy, I am not interested in any sale or merger of the Company, selling my shares to any third party or entering into discussions with any other financial sponsor for a transaction of the nature proposed in this letter.

I expect continuity of senior management through and following the transactions contemplated by my proposal. I am open to participation by continuing members of senior management in the new entity I and Rizvi Traverse propose to form to complete the acquisition (“NewCo”).

Based upon conversations with Rizvi Traverse which are in turn informed by Rizvi Traverse’s due diligence to date, I am in a position to propose that NewCo would acquire all of the outstanding shares of common stock not currently owned by me for $5.50 per share in cash. In accordance with the Company’s Certificate of Incorporation, the same per share price will paid to Class A and Class B common stockholders. The proposed per share consideration represents a 39.9% premium over the closing price of the Class B common stock on July 7 and premiums of 43.4% and 80.9% over the average closing prices for the last 30 days and one year,respectively.

Rizvi Traverse informs me that it has contacted major lenders regarding potential financing for this transaction and Rizvi Traverse is highly confident that ample financial resources will be available to complete this transaction. I and Rizvi Traverse contemplate that the definitive agreements will not contain a financing contingency.

This confidential indication of interest is non-binding and no agreement, arrangement or understanding between or among me, Rizvi Traverse or Playboy Enterprises, Inc. has been or will be created until such time as definitive documentation has been executed and delivered by all appropriate parties, and any proposed agreement, arrangement or understanding has been approved by the Special Committee and the Board of Directors, as appropriate. In that regard, you should be aware that while I have engaged in discussions with RizviTraverse in connection with this proposal, I have not entered into any agreement, arrangement or understanding with Rizvi Traverse concerning the transactions proposed in this letter.

This indication of interest and its contents are confidential, and should not be disclosed to any third parties, except to the extent that legal counsel to the Company advises the Board of Directors in writing that disclosure is required by applicable law or disclosure is made on a confidential basis to the Company’s legal and financial advisors.

I and my legal and financial advisors at Munger, Tolles & Olson LLP and Moelis & Company, LLC look forward to the earliest possible opportunity to discuss with the Special Committee and its legal and financial advisors the path to complete a mutually acceptable transaction.

Very truly yours,

Hugh M. Hefner
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Are Media M&A Reports Just a Bunch of Self-Serving Fluff?

Fri, 09 Jul 2010 13:25:19 -0400

Two of the media industry’s biggest investment banks/deal brokers put out reports in recent weeks, looking back at the mergers and acquisitions that have been announced over last six months. According to the report from Berkery Noyes—which was released this week and analyzes merger and acquisition activity of private equity companies in the Information Industry—while total aggregate transaction value decreased by 9 percent to $13.54 billion during the first six months compared to the second half last year, the total number of transactions (143) increased 22 percent.

The first half report from the Jordan, Edmiston Group—which tracks deal announcements across 10 media sectors and compared them to the same period in 2009—says media M&A is “heating up,” and that six of those 10 sectors showed “strong” growth over the first six months of the year.

Sounds like great news, especially after the media M&A market nearly dried up last year. But not everyone is buying the rosy picture painted by reports like these. “Do not believe some of these self-serving reports that the large industry investment bankers are releasing,” says one media M&A professional who wishes to remain anonymous. “They are just talking up their book and trying to generate some activity.”

“I don’t know how or why the M&A firms can say ‘life is great’ over and over again before it begins to wear thin,” another tells me.

Indeed, the traditional markets that many of these brokers serve—the sectors that magazine publishers have been serving in for years—are still on the decline (see JEGI’s by-sector chart here). “With very few exceptions, all trade show and trade magazine deals for the past two years has not been for strategic growth, but fire sale transactions,” says one M&A player. Other sub-markets, such as regional magazines, seem to still be constricted and tight and might not start to see an uptick until 2011.

Media Isn’t So Traditional Anymore

But the overall media market has changed pretty dramatically over the last few years, with the number of deals (and number of brokers serving those markets) growing much faster in emerging sectors than traditional consumer and b-to-b media. A number of brokers are shifting their focus away from traditional media in favor of those more active, profitable areas.

“While it is true that there have been some distressed sales and divestitures among the more traditional media sectors during the 2010 M&A upturn,” says JEGI COO Bill Hitzig, “consider this: of the nearly 450 transactions covered in our six-month report, the four most traditional media sectors (Newspapers, Consumer Magazines, B-to-B Media and Exhibitions & Conference) accounted for a mere 12 percent of the transactions and less than 8 percent of the transaction value. Take out the CanWest newspaper sale and that number drops to less than 3 percent.

“The real M&A story,” he continues, “is that larger strategic transactions are taking place in the growth sectors (namely Marketing & Interactive Services, Online Media & Technology and Database & Information Services), with both private equity and cash-rich strategics.”

Hitzig goes on to defend JEGI’s quarterly media M&A reports, saying the group “goes to great lengths” to provide an accurate and in-depth look at the market. “We track down deals from dozens of sources to present a thorough update in deal volume and value year-to-date,” he says. “As I said, our six-month report covered nearly 450 transactions, including ours, and the accompanying narrative talked up what is newsworthy, not what is self-serving.”

Berkery Noyes also responded. According to communications director Patrick Scanlan, the firm's reports are data driven and drawn from a proprietary database, which is constantly updated and reviewed. The deals are “thoroughly vetted by our research department,” he says, and are coded to classify them into various spaces and segments.

"More importantly, BNC has released these Trend Reports throughout the market decline of the past two years, despite little in the way of good news to report,” he tells me. “True to this philosophy, our current reports look not only to the current half-year, but trends across several preceding years. These trends signify not a miraculous revitalization, but recovery, within certain segments of our covered industries. Had we intended to distort this pattern for our own benefit, we would have compared first half of 2009 to the first half of 2010, a juxtaposition that would have displayed a meteoric rise in M&A activity.”

But, after all, even if reports like these come off as boastful to some, then maybe that isn’t such a terrible thing right now. “After the last 18 months, I don’t even mind the bragging [by the larger investment bankers],” says another M&A player. “At least they are finding something to brag about.”
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What True/Slant's Acquisition Really Means for Forbes

Bill Mickey — Thu, 27 May 2010 10:16:25 -0400

Tuesdsay's announcement that Forbes is buying entrepreneurial journalism site True/Slant may be a small deal, but the event will have a pretty significant impact on both brands going forward.

PaidContent estimates the deal in the "low single digit millions." The site launched just a year ago, after all, and True/Slant founder and soon-to-be chief product officer Lewis Dvorkin [pictured] told me Tuesday that monetization efforts only kicked in once the site reached one million uniques. "We used the first round of money to build a product, scale the contributor base and scale the audience. We only started monetization when we hit a million uniques, which was in December and January."

Yet the deal is not a bolt-on for Forbes. True/Slant's content production and ad models will be assimilated into Forbes and will kick off a significant rebuild of both the magazine and Forbes.com. The Web site is up first, says Dvorkin. "There's going to be a total re-architecture of Forbes.com—meaning a re-architecture of how it's produced, its structure, its UI and its design."

Sounds pretty much like a complete overhaul.

Dvorkin intends more than cosmetic changes for the magazine, as well. "I used to say that redesigns are more than a fresh coat of paint, you have to look at the foundation. How is content produced for the magazine? How is it produced for the Web site and how might those two play together?"

In the meantime, Dvorkin says the deal will close today, with a "good part" of the five-person team making the move over to Forbes (he wouldn't say who's going and who's not).

Of the three-hundred or so contributors who get paid on a flat-fee basis with monthly bonuses when traffic hits certain trigger points, it's "business as usual" through June, he says. However, Forbes and Dvorkin will be scaling down the contributor network as the site transitions into Forbes. Daily Finance's Jeff Bercovici, who is also a True/Slant contributor and sat through a contributor conference call with Dvorkin, has more on this.

And, according to WWD, it appears Dvorkin might be doing some scaling down at Forbes as well. He's reportedly scrutinizing the masthead for some high-level cost cutting.
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Give Me Money, Please

Fri, 21 May 2010 09:04:20 -0400

$40 would buy a pizza and a cheap bottle of wine for me to share with my girlfriend.

$150 would buy a bigger LCD monitor for our new Canon HD videocam.

$300 would buy the roundtrip airfare I recently booked to Puerto Rico (I found a great deal).

$850 would set me up for a good weekend at the casino.

Wishing people would donate money to me? Priceless.

OK, enough about me. The Nation apparently is having a rough go in this “hostile” publishing environment. According to a note from Washington editor Christopher Hayes, the left-leaning political magazine has a $1 million deficit and needs your financial help! (According to its Web site, at least $500,000 of that is from postal rate hikes, thanks in part to “Time Warner lobbyists.”)

The magazine often relies on donations and has set up an “Associates” donation group with special membership benefits, like discussion groups and members-only monthly conference calls, depending on how much you fork over. In fact, Hayes says donations make up more than 20 percent of The Nation’s revenues.

And if you really want to know what your hard-earned donation dollars go to, Hayes is upfront about how it helps:
$35 buys me dinner with a confidential source in New York
$75 pays for an interpreter for a reporter researching a story in Afghanistan
$150 covers an Amtrak ticket to Washington so a writer can testify before Congress
$300 buys a labor reporter's ticket to Detroit for a piece on unemployment
$500 (expenses extra) rewards a brilliant article by a young journalist on Tehran dissidents
Click here to make a donation to The Nation. I’ll let you know when I get the donation form up for that casino weekend I’ve been dreaming about.
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The Wrap Asks: Is the Media Rebound for Real?

Wed, 19 May 2010 09:11:24 -0400

The Wrap's media columnist and former FOLIO: digital editor Dylan Stableford put together a feature this week that takes a look at the advertising uptick being seen across media right now. He notes that a number of major media players like News Corp. and Time Warner have reported better-than-expected quarterly earnings.

But while the ad market is indeed showing signs of strength across several sectors (thank goodness), Stableford polls a number of media types (myself included) about whether what we’re experiencing might be a full-blown recovery or just the beginning of one. And, either way, why is no one talking about it?

I argued that while increased earnings and profits are of course good signs, those gains aren’t dramatic, and media companies certainly aren’t waving any victory flags yet. At least two important things need to be taken into consideration beyond simple chart scanning. One is that the first quarter of 2009 was really, really bad. So while a spike in sales so far this year is certainly a good thing the increase is compared to a period last year that saw severe losses.

Secondly, you need to consider how profits are being calculated. Some publishers might be reporting earnings increases or narrower losses, but only after shutting down magazines and cutting workforces. Some companies barely resemble what they were even two, three years ago.

For instance, struggling Playboy Enterprises reported a net loss of only $1 million through the first three months this year, compared to a $13.7 million net loss during the same period in 2009. But let’s not forget all the layoffs, the frequency reduction and how it farmed out all but the editorial operations at the magazine to American Media Inc.

The same is happening at magazine vendors, too. Printer Worldcolor reported a net loss of $29 million during the first quarter of 2010, compared to a loss of $126 million during the same period last year. It even doubled its adjusted EBITDA to $79 million, versus $36 million from last year’s period. But why? The company attributed the value boost to cost containment and reduction initiatives which saw workforce reductions and the closing of six facilities in North America.

No doubt, the remainder of 2010 will continue to be a difficult journey for media companies. Magazine publishers face two paper price increases this summer and are still trying to figure out how to make nickels from the Web, mobile and tablet platforms. But it won’t be without its bright spots. Hopefully the ad recovery will continue and help stem more losses.

In the meantime, let’s not all get carried away and throw any victory parties, just yet.
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Online Casino: Odds Are Murdoch Will Buy Newsweek

Wed, 12 May 2010 13:04:52 -0400

Forget betting on which team will make it to this year’s NBA championship or who will take home the 2010 World Cup trophy. Now that Newsweek is up for sale, you can place bets on which company will acquire the troubled title.

According to YouWager.com—a sportsbook, online casino and poker room—there’s a 33 percent likelihood that Rupert Murdoch will be the one to acquire Newsweek. Next up is Bloomberg (25 percent), Thompson Reuters (20 percent), Time Inc. (12 percent), McGraw Hill (9 percent) and OpenGate Capital (6 percent). [View the chart below for the return on wagers.]

It’s fun to categorize buyers’ chances Las Vegas-style, but how did YouWager calculate the odds? “First comes the need to do some research,” YouWager.com Cory Scott tells me. “These are public companies, so it's easy to see how they've been performing over the last few quarters. Next, you come up with your odds. Fans like to root for the favorite, while gamblers love a long shot, so you need to put up companies that have a possibility of going down based on performance, but it still needs to be unlikely to justify the larger payout.”

Scott adds that the site also takes into account the popularity of the companies being bet on. “People won't bet if they don't have an opinion, and they won't have an opinion if they don't know anything about the team or, in this case, the company,” he says.

What are the Odds that Playboy Gets Sold?

YouWager didn’t stop with Newsweek. The site has also placed odds on which major magazines will most likely be sold this year. Playboy tops the list at 29 percent followed by Time (25 percent), Vogue (20 percent), Sports Illustrated (18 percent), Vanity Fair (14 percent), National Geographic (14 percent) and People (13 percent).

Scott came up with these odds by applying the same criteria as he did for Newsweek. “Playboy’s revenue for print and digital is down 26 percent, and this is a trend that has been going on for a while,” he said. “I compared Playboy to the other companies and decided they are the most likely candidates to go down based on recent and past performance.”

Because Playboy has had financial trouble and because of the current state of the economy, Scott felt there’s a 25 to 30 percent chance that the company’s magazine would be sold, which equals roughly to +250 or $250 for every $100 risked. “After I set the odds, I need to ask myself whether people have an opinion on Playboy going down. I think so, so the odds go up with Playboy as the ‘favorite’ to go down, but it’s still an unlikely outcome.”

So, get your pocketbooks ready, and place your bets!

Odds that one of the options below will purchase Newsweek
Rupert Murdoch +200 (33%)
Bloomberg +300 (25%)
Thomson Reuters +400 (20%)
Time Inc. +750 (12%)
McGraw Hill +1000 (9%)
Opengate Capital +1500 (6%)

Odds that one of the listed magazines will be sold this year
Playboy +250 (29%)
Time +300 (25%)
Vogue +400 (20%)
Sports Illustrated +500 (18%)
Vanity Fair +600 (14%)
National Geographic +600 (14%)
People +700 (13%)

[The +/- indicates the return on the wager. For Example: Betting on the candidate least likely to win would earn the most amount of money, should that happen. The percentage is the likelihood the contestant(s) will win.]

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Who Would Buy Newsweek?

Thu, 06 May 2010 10:48:50 -0400

After years of hefty losses, the Washington Post Company Wednesday said it had hired media and entertainment investment bankers Allen & Company to explore a sale of ailing Newsweek magazine.

What does the market look like for a sale of Newsweek, a magazine that has been losing millions of dollars year-after-year? In 2009, Washington Post Co.’s magazine division, (which also included Budget Travel, until it sold in December) reported an operating loss of $29.3 million. “The losses at Newsweek in 2007 to 2009 are a matter of record,” Washington Post Co. chairman Donald E. Graham said. “Despite heroic efforts on the part of Newsweek’s management and staff, we expect it to still lose money in 2010.”

Just last year, with the economic recession still rolling, several interested parties—including Joe Mansueto, ZelnickMedia and Platinum Equity— stepped forward when McGraw-Hill put BusinessWeek, a magazine that reportedly lost more than $40 million the year before, on the block. It eventually was acquired by Bloomberg LLC for only $5.9 million, after tax.

One might assume that Newsweek could muster just as much interest. In fact, some parties apparently have already expressed an interest. Editor Jon Meacham told the New York Observer that he was contacted Wednesday by “two billionaires” who inquired about buying the magazine. Meacham himself said he’d consider rounding up some investors to place a bid. And then there was Henry Blodget, CEO and editor-in-chief of Business Insider, who offered only $1. (Remember OpenGate Capital’s $1 acquisition of TV Guide from Macrovision in 2008?)

Jokes aside, I polled a small handful of our sources in the M&A market to pull together a list of companies/publishers that may make good suitors for Newsweek. Among them were OpenGate, Reuters, Politico, Dennis Publishing (owner of The Week), Newsmax, Tina Brown’s the Daily Beast and the Huffington Post. I fired off e-mails to reps at all but Reuters and the Daily Beast but couldn’t immediately reach any for comment.

Some, of course, seem more likely than others. Upstart Politico, which is backed financially by Allbritton Communications owner Robert Allbritton, would make an interesting suitor if for no other reason than it was co-founded by Washington Post defectors John Harris and Jim VandeHei. Newsmax, which one source tells me will “very possibly” make a move for Newsweek, would be an interesting buyer because the Republican news monthly effectively could snuff out a liberal-leaning rival. I’m sure Dennis Publishing owner Felix Dennis is still flush with cash after the sale of Maxim. But would the outspoken entrepreneur actually get involved?

No doubt, it will be difficult for any potential player to justify buying Newsweek. The lag time between closing a deal and somehow making it profitable again would be long and weighed down with additional losses.

A strategic buyer with deep pockets would make the most sense—a company that thinks buying Newsweek would add to the value/profitability of its own core business. That’s essentially what happened with Bloomberg and BusinessWeek. Not surprisingly, though, Bloomberg already has said it is not exploring a bid for Newsweek.

Would others like Time magazine parent Time Warner or The Economist Group be willing to take the risk? I’m not so sure.
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New Owner: Editor & Publisher 'More Vital Than Ever'

Fri, 15 Jan 2010 15:28:38 -0500

The fate of 126-year-old Editor & Publisher is no longer drifting in uncertain waters. The shuttered newspaper magazine was acquired Thursday evening by Duncan McIntosh Co. Inc., the Irvine, California-based publisher of Boating World, Sea Magazine and The Log newspaper.

Wait, what? Why in the world would the publisher of boating magazines want to buy a big-name property that covers the newspaper industry?

"I published newspapers when I first got into this business and have been reading Editor & Publisher on and off for more than 30 years," Duncan McIntosh told me over the phone today. "I heard about its closing and thought to myself, 'That can't be.' I started sending e-mails to Nielsen until someone would finally talk to us. And, now, here we are."

Nielsen closed E&P, along with sister publications Kirkus Reviews, last month after it announced the sale of eight media/entertainment brands—including Billboard and The Hollywood Reporter—to e5 Global Media, a new company formed by private equity firm Pluribus Capital Management and financial services firm Guggenheim Partners.

The newspaper industry's dramatic decline, Duncan said, is what made saving E&P so important. "When do you need a magazine like Editor & Publisher more? When everything is going great or in a tie of crisis,"he said. "It's more vital now than ever."

OK. But how is a newspaper magazine going to mesh with his stable of boating publications? "Maybe I'm not cerebral enough to worry about things like that, but I don't think it will be a problem," said Duncan."The back end, in terms of production, IT and Web, is the same regardless of the publication. As long as I have separate ad staffs and separate editorial staffs, everything else is the same. We think we can supply all the support services for it, we can bring it into a structure with a much lower overhead, and make it viable."

In terms of editorial direction, Duncan said E&P is and has been right on course, producing best practice-type content for publishers. He said he has no immediate plans to change the magazine's monthly frequency or circulation.

"The magazine has a great staff and we were lucky enough to keep about 80 percent of them," he said. E&P's former editor-at-large, Mark Fitzgerald, will now serve as editor, replacing former editor Greg Mitchell, who is no longer with the magazine. Charles McKeown will continue as publisher.

This isn't the first time we've seen a big b-to-b player shutter a magazine, only to be contacted by a smaller publisher who wants to acquire it. Last April, Reed Business Information shuttered all but one of the magazines published under its Associated Construction Publications Group, which consisted of 14 regional construction titles. John White, the original co-owner of the ACP titles, then reaquired the licenses and relaunched them gradually before the end of the year.
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Odds that one of the options below will purchase Newsweek
Rupert Murdoch	+200	(33%)
Bloomberg	+300	(25%)
Thomson Reuters	+400	(20%)
Time Inc.	+750	(12%)
McGraw Hill	+1000	(9%)
Opengate Capital	+1500	(6%)

Odds that one of the listed magazines will be sold this year
Playboy	+250	(29%)
Time	+300	(25%)
Vogue	+400	(20%)
Sports Illustrated	+500	(18%)
Vanity Fair	+600	(14%)
National Geographic	+600	(14%)
People	+700	(13%)