Sold: Gems Group, Crafts Group, Hunting, Fishing and Shooting AssetsBuyer: VariousPrice: $300 million total (estimated) Date: VariousTakeaway: The deconstruction of publishing behemoth Primedia picks up speed.
Primedia spent the better part of 2006 selling off pieces of its company, and many observers believe its controlling shareholder, Kohlberg Kravis & Roberts, along with president and CEO Dean Nelson, is on the way to divesting the entire company, which has a $1.32 billion debt burden.
Among the divisions and products to go were its crafts group, which went to Sandler Capital Management for $132 million; its gems group, which went to Interweave Press for an undisclosed price; and the hunting, fishing and shooting assets from its outdoors group to Intermedia Partners for $170 million. In December, the company sold Climbing, a 40,000-circ publication with a 10-times frequency, to Skram Media of New York, in an effort to continue its pursuit of a tighter focus on assets targeting a younger, 18 to 34-year-old demographic.
Primedia, which publishes Motor Trend, Surfer, Horse & Ryder, Soap Opera Digest and numerous other titles, also classified its struggling education unit as discontinued late last year as it explores strategic options for the division. It announced plans to spin-off its consumer guides group into a separate, publicly traded company called Consumer Source Inc.
The movement at Primedia also is part of a two-year transition the company has undertaken to increase profitability. In 2005, the company sold its b-to-b division to Wasserstein & Co. for $385 million, and Web portal About.com, which it paid $690 million for in 2000, to the New York Times Co. for $410 million. The Consumer Source will more than likely help Primedia to become more profitable by paying a dividend of $484 million at the time of the spin-off, which Primedia will use to pay down some of its $1.32 billion in debt.
The company’s revenues fell in 2005 to $991 million, from $1.3 million in 2004. But its revenues were up in the first nine months of 2006 to $752 million, from $734.3 million in 2005. Segment EBITDA for the first nine months of the year is down 3.2 percent to $122.3 million, compared to $126.3 million in the first nine months of last year.
While Primedia reported slight increases in revenues in its consumer and enthusiast groups in the first nine months of last year, it reported 15.8 percent decline in revenues from its education group. Many believe the education group will be the next to go as Primedia continues to sell in pieces.
Comments: [Former Primedia founder and CEO] Bill Reilly was comfortable with the way the company was structured and may have tried to sell it intact. But since he’s been gone, there’s been a succession of CEOs, all with different selling strategies. And selling the company in pieces has been a way to become more focused.