Conlin Out as CEO of Primedia as Company Contemplates Split
By Tony Silber and Matt Kinsman
Primedia Inc. announced late Monday that it is exploring a breakup into two publicly traded separate companies. Primedia also announced that CEO Kelly Conlin
has decided to leave the company, effective immediately.
In a press release, Primedia said it wants to “unlock value for shareholders” by separating the businesses through a tax-free spinoff, where shares would be distributed on a pro rata basis to all shareholders. In the split, the company’s guides unit would be separated from its enthusiast media and education units.
“PRIMEDIA has made significant progress over the last three years streamlining the business and reducing leverage,” company chairman Dean Nelson said in the statement. “We believe the separation of these segments into two distinct businesses is the next logical step in the clarification of our long-term business strategy and that this plan would lead to greater growth opportunities and ultimately enhanced shareholder value.”
Nelson has been named CEO, replacing Conlin.
Industry reaction was sudden. “I was stunned to learn that Kelly is leaving Primedia, where he had done an excellent job improving the balance sheet, selling non-strategic assets for very attractive prices, de-leveraging the company and improving the quality of the core properties,” said Tom Kemp, managing director at VSS. “But presumably the decision to split up the company into two pieces eliminated the opportunity for Kelly to be CEO of a large media company.”
Added Cam Bishop, CEO of Ascend Media and a former CEO of Primedia’s b-to-b unit, “The financial backers are doing exactly what they say they're trying to do, they're trying to figure out a way to extract some value out of the business. I can't say this surprises me. It's a creative approach. I would have expected them to sell those other divisions. These are good businesses. ”
Primedia, which is owned by the giant equity firm of Kohlberg, Kravis Roberts & Co., has been steadily divesting pieces over the last several years, including the large consumer magazines Seventeen, New York, Modern Bride, American Baby and Chicago Magazine.
In August it sold its b-to-b unit to Wasserstein & Co.’s PBI Media Holdings, Inc. for $385 million
For the first six months of 2005, Primedia’s enthusiast unit;which includes 120 consumer magazines, and such brands as Motor Trend, Creating Keepsakes, In-Fisherman and Surfer;posted revenue of $338.9 million, a 1.3 percent decline from $343.5 million in the first half of 2004. Its guides unit posted revenue of $155.1 million, an increase of 8.8 percent from the $142.5 million it posted in the first six months of 2004. EBITDA declined significantly for both units in the same period, according to company reports. The education unit produced $37.3 million in the first half, up from $33.8 million last year, and its EBITDA soared y 138 percent, to $5.0 million for the half.
The company is holding a conference call for investors Tuesday morning. It will report 2005 third quarter results November 8.