Buying and Selling in the Magazine Media World - Inside Numbers and Analytics

Magazine Mergers
and Acquisitions

The business deals were churning and active in the 2012 magazine publishing empire --- which is usual for this dynamic, fast-paced publishing sector embellished with startups and shutdowns.

Tonight we will discuss some of the top deals along with the inside numbers (when available), reasons for the sales and/or acquisitions and other pertinent analytics.

This data is provided by FOLIO: magazine:

Top Magazine Media Deals of 2012 

The year 2012 opened in dramatic fashion with magazine media-related deals. From Hanley Wood’s recapitalization to the final sell-off the remaining segments of what once was the massive Ziff Davis, 2012 saw its fair share of deals that involved traditional media brands as well as the currently-hot marketing services and digital properties.
In some transactions, where the acquirer bought a brand that included a print title, questions loomed over the print product’s survival. In other cases, magazines were valued assets in a larger multiplatform deal. The majority of deals that we’ve selected as notable for the year, however, were done by strategic buyers. Private equity firms certainly put their money to work, but it was a busy year for strategics, which took advantage of several bargain opportunities.


Property: Hanley WoodBuyer: Oaktree Capital Management, et al.
Date: January 2012
Price: Debt reduction: $440 million down to $80 million

Hanley-Wood received a major financial reprieve through a debt-reduction deal to kick off 2012. In a recapitalization plan, the company reduced its long-term debt of $440 million to $80 million. As a result, Hanley Wood has a new ownership group led by Oaktree Capital Management, which also injected $35 million of capital into the company.

Serving the residential and commercial construction markets, Hanley Wood, considered one of the best-run b-to-b media companies, was hit particularly hard during the economic downturn and has continued to struggle as the housing market has been one of the slowest to recover.
The new ownership group, which also consists of Strategic Value Partners and Tennenbaum Capital Partners, is betting the debt reduction and new capital will give the company some breathing room until the markets improve.

Takeaway: The the debt reduction was a lifesaver for Hanley Wood. The company spent the rest of the year overhauling its executive team as well as the corporate structure, moving digital first and putting that extra capital to work via a set of acquisitions


Property:Allrecipes.com
Buyer: Meredith Corp.
Date: January 2012
Price: $175 million

After putting the property on the block in October 2011, Reader’s Digest Association sold Allrecipes.com and related digital assets to Meredith Corp. for $175 million.
This purchase nearly doubled Meredith Women’s Network audience to 40 million monthly uniques. Allrecipes.com also boasts a younger audience base; Meredith’s current female demographic falls in the mid-forties.

Attracting younger readers to the Meredith portfolio was top of mind for the company. When Meredith bought FamilyFun magazine from Disney earlier in the month, the title’s younger audience (the average FF user is 35 years old) was considered a key factor.
The site moved into Meredith’s food portfolio, which included another recently acquired RDA title, Every Day With Rachael Ray, as well as newly added Recipes.com and EatingWell Media Group.

Takeaway: The deal was an instant audience multiplier for Meredith, which doubled its digital readers


Property: Ziff Davis EnterpriseBuyer: QuinStreet
Date: February 2012
Price: Undisclosed

In a bit of a head-scratcher, Ziff Davis Enterprise, one-half of what remained of one of the most storied companies in the history of publishing, was sold to QuinStreet, a publicly-traded lead-generation marketing company based in Foster City, California.

The way the deal was structured, QuinStreet acquired the brand assets, not the people. Accordingly, there was a significant round of layoffs associate with the deal. As many as 30 people were let go immediately and in the following weeks, a total of 100 ZDE employees would be cut from a workforce of 120 people.

“Both companies are committed to doing right by their customers and there’s obviously a lot of business in transit that can’t just be chucked over the wall to QuinStreet,” said a source. “It’s kind of a funny deal, initially there were a lot of folks who were not brought on board to QuinStreet but are continuing to be Ziff Davis Enterprise employees with various responsibilities for facilitating the transition.”

Takeaway: The deal signaled the attractiveness strong brands have as lead-gen vehicles, which was presumably why QuinStreet made the purchase. However, the longevity of that brand strength was questioned when many of the content experts were not carried over to the new owners

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The State of Publishing - A Literary Agent's View

A literary agent's
point of view
 

How has publishing changed from the perspective of a pub pro whose own job function/s may have been altered? How has he adapted? How has the new tech changed his outlook? E-books or print books? How has his duties changed from what they were 10 years ago?

We're going to find out in tonight's post.

Remember, this agent's view is coming from one direction only and would need to be meshed with other industry professionals' views to get a more well rounded picture --- But, it is coming from an important source.

This from Business Insider by Dylan Love:

Here's How Literary Agents Use Technology To Find The Next Great Authors

Scott Hoffman is an agent at Folio Literary Management, representing some of the preeminent authors on bookstore shelves today.

He comes from a varied background, having formerly run a lobbying firm in Washington, DC and transitioning out by getting an MBA in finance. He quickly realized it was a lifestyle he didn't want.
As he told us, "Who wants to spend 18 hours a day, eight days a week staring at spreadsheets in a cubicle, no matter how much they pay you? When I got done with grad school I realized that my two favorite things in life were books and deals — and that I could have a career that would combine both things. I've got the best job in the world."

Since it's quite literally his business to keep his finger on the pulse of the book world, anticipating trends and reacting to changes, we fired a few questions his way about the future of books.

BUSINESS INSIDER: For the normals, what exactly does a literary agent do?

SCOTT HOFFMAN: The same way that actors, actresses, and athletes have agents, most authors do as well. It's an agent's job to manage an author's career and ensure that he or she is fairly compensated for work produced.

In practice, this includes negotiating deals with publishing houses both in the US and all over the world; making sure that other rights in an author's books (audio, film and TV, etc.) are exploited to the greatest extent possible, and that publishers and other rights holders live up to their contractual obligations.

Basically, we're in the artist management business. In general, the kind of skills a person needs to sit in a closet for a year and write a beautiful novel, or to research and write an important nonfiction book are generally not the same skills that are necessary to maximize the economic value of intellectual property — and that's where we come in.

BI: How is your job different today from how it would've been 10 years ago?

SH: For one thing, there's a LOT less paper involved. Every agency has its collection of unsolicited submissions – the proverbial "slush pile" – where query letters from unpublished writers trying to convince the agency to represent them go. Ten years ago, it really was a pile — and in some cases, a mountain. Now, we handle all unsolicited subscriptions electronically, which makes for a much neater (and more environmentally-friendly) office environment.

More than that, though, the same forces that have transformed the slush pile have transformed the entire industry. Technology allows more authors to connect directly with their audience, and the rise of the independent model means that Big Publishing — the collection of agents, publishing houses, and traditional retailers — is no longer the gatekeeper it once was. In general, I think that's a good thing. The only way to make money in the publishing business in the long term (or in any business, really) is to give consumers what they want at a price they want at a time and a place of their choosing. Traditional publishing is, by definition, a mass medium — the entire business model is predicated on lots of people wanting to read the same book(s) at more or less the same time. That model is never going to go away— and the authors who achieve success in that fashion will be more successful than ever, for a few reasons.

First, as the world gets richer, more people will buy books. The rise of the middle class in places like Korea, Brazil, and Taiwan means that more wealth is available to consume entertainment and information in the form of the written word (whether those words are printed on papyrus or displayed on an electronic screen, or delivered in a manner we can't even conceive of at the moment.) Second, when consumers find a product they like, it's much easier for them to communicate the value to their tribe — which means that a book can achieve success much more quickly now than ever before.

In addition, the disintermediation of the gatekeepers allows the producers of content to succeed with the kinds of books that The Establishment never would have seen coming. Markets are a much more efficient way of determining what people actually want than a de facto committee made up of a bunch of people who all go to the same cocktail parties in Manhattan and Brooklyn (however smart we may be.) It also allows for books that occupy small niches to succeed in a small way, which is undoubtedly a good thing as well. Random House is never going to publish a book on how to repair your horse's hoof — but if you need to know, you're probably willing to pay a premium — and the person who does know, is going to be happy to tell you, for a small fee. Both parties are much better off.

BI: Does the signal-to-noise ratio of the internet make it easier or harder to find new talent?

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New Publishing Model Gives Authors Even More Control

New Interface
business solution

Publishing is mutating again.

“You don’t have to choose between the tyranny of traditional and the anarchy of self-publishing..." --- Tim Sanders, bestselling author,  former Yahoo! executive and founder of Net Minds.

A brand new pub model has hit the beach! --- A sure sign that energy and mojo are present and accounted for and electrifying self-publishing into new directions ---empowering authors (as well as other publishing professionals) and shortening the timeline to success and bestseller status.

A superlative review by yours truly. Maybe a little too enthusiastic, but, this new publishing model does hold some promise --- especially in allowing authors, editors, book designers, marketers, etc., to negotiate forming teams, creating relationships, sharing royalties and working much like 'start ups'. 

Mercy Pilkington gathered some details from the TOC conference this week and spilled the beans in The Good E Reader for us:

Net Minds Looks at Revitalizing Self-Publishing

There’s no doubt that the face of the publishing industry is changing, and quite possibly that it has changed more in the last five years than over the entire course of its history. As digital publishing and self-publishing became more the norm rather than an arena relegated to tech geeks or authors who couldn’t find publishing deals, the industry in every facet has had to race to keep up.


But just when the industry finally seemed to settle into a comfortable relationship between traditional print publishing and self- and digital publishing, a whole new model has come along, turning it on its head once more. Net Minds, founded by bestselling author and former Yahoo! executive Tim Sanders, has created a whole new model in which authors have even more control over the process by negotiating for some of the best talent in the book publishing industry to help bring their creations to market.

“We empower authors to meet publishing professionals, create relationships, share royalties, and build great teams that run like start ups,” explained Sanders in an interview with GoodEReader at Tools of Change this week. “Everybody has an incentive beyond the fee and is highly engaged and entrepreneurial with their work.”

Sanders took the concept of solving a problem with a minimum viable model in order to achieve the greatest reach with the least amount of inefficiency, a problem that is prevalent in the publishing industry, especially from the first very stage of acquiring content. This model will have its first real test when Net Minds releases its first title next month, Finding the Next Steve Jobs, by Atari founder Nolan Bushnell.
“The window for success has shortened dramatically,” Sanders said. “”It impacted the ability for me to be a bestseller.”

The process for Net Minds to build a joint venture mission and to work on a model more along the lines of how films are optioned and produced, which allows those involved in the project to earn a portion of their standard fee up front along with a portion of royalties for the life of the project.

“You don’t have to choose between the tyranny of traditional and the anarchy of self-publishing. In the future, they won’t even call it traditional versus self, they’ll call it corporate versus alternative. Our vision is that the author doesn’t have to choose between quality and freedom.”

Read and learn more

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Beyond Hybrid Author To Entrepreneurial Author

Conquering the business
side of writing 

I've been getting a lot of feedback lately decrying all the roadblocks to being a successful author in today's 'chaotic' publishing environment --- As if tons of roadblocks didn't exist under traditional publishing :)

Friends and neighbors, ANY publishing system is going to have roadblocks of some kind! The trick is to find creative ways around these damn obstacles. Same requirement to success as in any industry.

So tonight we will discuss the absolute need for the modern writer to develop as an entrepreneur and businessman to become a successful writer. Writers today need to get out from their writing enclaves and interact with people, places and things (on the Internet, too) to develop a following and master at least a rudimentary knowledge of marketing --- a game changer goal would be to invest in study and become a master marketer --- what you could do with your content then :)

Writers need to do this to discover what needed skills they may have an affinity for or weakness in --- With this knowledge they can decide what skills to outsource, no?

First, definitions:

Hybrid Author: An author who publishes (or works toward publishing) through both traditional publishers and non-traditional alternatives such as self-publishing.

Entrepreneurial Author: An author who gets as serious about the business of being a writer as they are about their writing. 

The following article (let's call it a study piece tonight) by Kristen McLean in Electric Literature dot com is a must read and an excellent place to start on your road to being a more successful writer (it is chock full of resource links):

Author as Entrepreneur: the new model for success

For hundreds of years, the image of the solitary writer as successful creative genius has been the dominant paradigm. Well, we have to rethink that—it seems that today’s successful author is looking more and more like a highly engaged startup entrepreneur than a solo artist.

According to the just released study from Digital Book World and Writer’s Digest What Authors Want: Understanding Authors in the Era of Self-Publishing, the hybrid author—an author who has published through traditional publishers, and non-traditional alternatives such as self-publishing—outperforms both their traditionally published and self-published peers by just about every measure.

Hybrid authors make on average $10K more a year from their writing than traditionally published authors surveyed, and nearly $31K a year more than the self-published authors. They also command higher advances, and demonstrate more sophisticated attitudes about everything from the importance of great editing to what “prestige” is really worth in a traditional deal. (It’s a fascinating survey—I highly recommend it.)

What also emerges from the survey is evidence of the effort they are putting in to engage their audience and build their business.

78% of hybrid authors are on Facebook versus 68% of their traditionally published colleagues, and 56% of their self-published colleagues.

Hybrid authors are also 10% more likely to be blogging, and have been on Twitter 12% longer than their traditionally published colleagues. That rises to 16%, and 23% respectively when compared with self-published authors.

Clearly these guys are working it.

I’ve written elsewhere about why I believe authors need to get as serious about their business as they are about their writing. It’s why I’m building a new breed of analytical tools for authors, and it’s why I joined my friends at O’Reilly Media’s Tools of Change project to co-chair the first Author (R)evolution Day* on 2/12 to get writers and the industry talking about these issues together.

Read and learn more

Related article for study: Expanding Options for Publishing: The New Hybrid Author

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Disagreement Over Relevance of Traditional Publishing

Debate on Relevance
of Traditional Publishing

What the hell is really happening with TP's?

In this writer's humble opinion the TP's have been surrounded by the e-book nation and are fighting with their last round of ammunition: marketing (and that is definitely debatable) :)

Marketing is the big advantage to go with a TP according to Michael Pietsch, soon-to-be CEO of the traditional publisher Hachette Book Group.

BUT, Mark Coker, founder of the self-publish book distributor Smashwords, says "over the next few years, traditional publishers are going to become more and more irrelevant."

Hmmm --- can't really argue with that; especially from the point of view of newbie authors who never received any appreciable marketing from TP's any damn way --- They had to do there own marketing --- Talk about being left out on a half sawed-off limb! A really hit-n-miss career building model.

Anyway, tonight's post is an NPR interview/debate (and you can also listen to it) between Pietsch and Coker (with some great follow-on comments by readers/listeners) on:

Why Traditional Publishing Is Really In A 'Golden Age' (or not - added by John)

How healthy is the traditional publishing industry? Not very, says Mark Coker, founder of the self-published book distributor Smashwords. On Monday, Coker told NPR's Audie Cornish that "over the next few years, traditional publishers are going to become more and more irrelevant."

But Michael Pietsch, soon-to-be CEO of the traditional publisher Hachette Book Group, disagrees. "I think we're in a golden age for books — reading, writing and publishing," he tells Cornish. "And the ways that publishers can work to connect readers with writers now are the kinds of things that publishers have dreamt of doing since Gutenberg first put down a line of type."

Pietsch joins Cornish to discuss how marketing sets a publishing deal apart from the self-publishing model.

Interview Highlights

On why writers pick publishers over self-publishing

Read and/or listen and learn more

Hearst Magazines Publishing E-Books - You Don't Say!

Cosmo Red Hot Reads

A little titillation tonight.

The magazine publishing industry is expanding its revenue base it seems --- by experimenting with the e-book publishing market (and why not? Everybody else is).

And in an outstanding and very successful genre at that: the women's and romance slice of the written word universe.

In the case described in tonight's post it is Cosmopolitan magazine (in Hearst magazine's stable) teaming with Harlequin, a huge women's and romance novel publisher. The business numbers and thinking behind Cosmo's decision to explore e-book publishing is also touched upon.

And what will be the name of this collaboration ? The same branding as the content section of Cosmo magazine that publishes literature for readers:

Cosmo Red Hot Reads :)  

T. J. Raphael reports this in FOLIO magazine:

Hearst Jumps Into E-Book Publishing With Cosmo Red Hot Reads

Two original e-book titles to be published per month beginning in May 2013.

Hearst Magazines is testing out the e-books market with the safety net of the world’s largest women’s magazine—Cosmopolitan. In a joint partnership with Harlequin, a women’s and romance novel publisher that spans 114 international markets, Hearst will introduce digital books bearing the Cosmopolitan logo.

Under the agreement, Harlequin intends to publish two original 30,000-word e-book titles per month beginning in May 2013. The novels, which will be written by some of Harlequin’s bestselling authors, will take on the brand’s editorial voice and be reminiscent of the popular title Fifty Shades of Gray, editor-in-chief Joanna Coles says in a statement.

“We took a look at some of our studies and it turns out 1 in 7 Cosmo women read romance novels, more than 10 million Cosmo readers bought at least one book in the last 12 months and 1.8 million readers bought at least one romance novel,” Mark Gompertz, creative director of Content Extensions for Hearst Magazines, tells FOLIO:. “We didn’t have to be convinced anymore that this was the time to create a line of romance fiction.”

Cosmo Red Hot Reads is a content section with the magazine that publishes literature for readers. These shorter length books published by Harlequin will share that branding and cover the same type of subject matter that this content section in Cosmo is known for.

“Romance readers were really the first to embrace e-books when the trend started,” says Gompertz. “These readers buy multiple books at a time and are constantly reading so we wanted to make them long enough so the reader would be absorbed, but short enough so they could read another right after the last page is turned—that’s really the Harlequin thing.”

These e-books will be available for all major platforms and devices—e-readers, tablets and smartphones for Apple, Android and Windows products. Gompertz says some of the more successful titles could also wind up in print, though the main focus is on the digital landscape. Right now the book will be all content but it is possible that editions could see images or interactivity in the future. Hearst and Harlequin are still determining how to price these books.

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