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Tuesday, February 26, 2013

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

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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