Rodale’s “Strategic Option”: Seeks $100 Million for Digital Push
Rodale, the Emmaus, Pennsylvania-based publisher of Runner’s World, Men’s Health and Prevention, among others, has partnered with JPMorgan to explore strategic options; a team-up reported on earlier by the NY Post’s Keith Kelly. While comments from the industry have downplayed anything as serious as a sale, sources tell Folio: that Rodale is looking for capital to fund a significant roll-out of its Internet operations. One source speculates as much as $100 million.
Multiple sources have confirmed to Folio: that, as reported, private-equity firm Elevation Partners, and, so far, only Elevation Partners, have been through the Rodale offices, sparking wild speculation around the company for the past month.
Comparisons to the Forbes deal, when Elevation paid approximately $300 million for an estimated 40 percent stake in that company, were inevitable, but make sense. "If they are to grow they need to bring in another investor," says one industry source. "They saw what happened with Elevation Partners and Forbes, because they went in there to invest in the Internet."
And what does Rodale want to do? Build out a significant Internet presence, say sources. And, according to another source, with Best Life and Women’s Health siphoning off existing capital in the amount of seven figures, the funds simply aren’t there to achieve the scale the company’s looking for. "If they could get a big chunk of money, they could heavy-up in other areas. They’ve got two very expensive investment properties in Women’s Health and Best Life right now;that Prevention, Runner’s World and Men’s Health can’t necessarily continue to fuel. And I think the JPMorgan/Elevation thing is to ramp up other areas the company hadn’t already planned for, meaning more along the lines of the digital space, almost exclusively."
While the Backpacker sale in May for $14 million in hindsight was not a clear signal of the company’s current intentions, it was symbolic of an emerging corporate trend. "It seems to fit into a larger trend of the company wanting to raise money to make a bigger play, particularly in an online health and fitness space. There’s been a lot of chatter in the company that, for what the ambition is, they’re not quite big enough to pull it off. And it’s a fish or cut bait kind of moment," says another source.
Indeed, according to this source, it’s not simply a build-out of existing magazine sites. "It’s not going to cost $50 million or $100 million to build out Runnersworld.com. There’s certainly a lot of investment that they want to make in the individual sites, but I think there’s a bigger play afoot."
The thinking goes, says the source, that if Rodale was looking for an outside investment of partial-share ownership, doing the numbers from that perspective would lead to some significant numbers. "Rodale is doing well enough and has enough love from the banks that if it was just matter of going out and raising $20 million, you don’t need a new partner for that."