Was the Time Sale A Done Deal Weeks Ago?
It didn’t take Time Inc. long to pick a buyer after receiving second-round bids Monday on the 18 magazines it was selling. Some say that’s because the media giant had made up its mind weeks ago to sell the magazines to the Bonnier Magazine Group, the lone strategic bidder on the group, but continued to drag out the process to the detriment of the five other media companies involved in the bidding. “You could see six to eight weeks ago that Bonnier was the lead horse and we kept asking, ‘should we be in it?'” said one source Thursday. “And they kept saying it wasn’t and we should stay in it. But to have six people go through the expense and the time that its takes to complete the due diligence when you know that you’ve already picked someone is wrong.”
Terry Snow, CEO of World Publications, which will be merged with the 18 Time titles under the terms of the deal, said he was not sure what went into Time’s decision to select Bonnier as the winner, but acknowledged that being a strategic may have helped. “A strategic buyer has a longer view on the business and seeks to make a profit over a 10 to 15-year period rather than a three to five-year period,” he said. “We look at things differently when we assess a company because we look over the long-term. The other thing is that it’s traumatic for companies to be sold and resold and then resold again. So this will be a nice, stable place for those publications.”
Skip Zimbalist, CEO of Active Interest Media – a private equity-backed company that bid on the Time Inc. titles, said he believes Bonnier had an edge over his company because it is a strategic. “I thought they were in the lead because they’re looking to establish a platform in the U.S. for future acquisitions and they are looking a 20 or 30-year horizon for getting a return on their investment,” he said. “Those of us based on private equity backing can’t get that kind of horizon. So that allows a company, like Bonnier to bid more money and go more slowly in making changes.”
Others were not as congenial in their assessment of the bidding process. “It was the most screwed up process I’ve ever seen,” said one bidder. “It was the worst offering memorandum I’ve ever seen. The information was incomplete. We basically had to go through and build the business model from the ground up to figure out Time Inc.’s costs, which I’m sure is what Bonnier did too. We had to go through the expense of getting lawyers and accounts and the banks to go through the multiples and it turned out to be unnecessary because they had already made up their minds.”