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Primedia's Long, Strange Trip
The unwinding of Primedia, the $1.3 billion mostly print media conglomerate, seems to be picking up steam. Deliverance for the company's long-sufffering shareholders may be at hand.
After selling About.com to The New York Times last month, Primedia announced it has decided to put its $225 million Business Information (BI) unit on the block. BI consists of 70 publications, 100+ websites, 25 tradeshows and 50 directories/data products. Since 2000, Primedia has sold 26 properties and bought 17.
Primedia is the creature of LBO firm KKR, who bought into the notion that profit margins could be wrung from media properties by lashing together production, marketing and administrative functions for economies of scale.
But media isn’t like other industries and KKR’s quest has proved quixotic. For example, it turns out that magazines address highly niched markets and applying standardized processes across these myriad titles is hard.
The company’s difficulties in realizing its elusive benefits of scale were exacerbated by the huge amount of long debt KKR heaped on the business, today still at $1.6 billion. The result: since its rather forced march to a public debut in 1997, Primedia has racked up cumulative losses of $3.5 billion while stockholders have seen their shares swoon from around $12 to about $4.40.
After BI’s sale, what’s left? The literal answer is:
But a better answer to the question of “what’s left” might be “more properties to sell”. For Primedia’s shareholders, owners of a broken business model, selling out entirely could free their capital for more productive uses.
- The Enthusiast Media unit comprised of 120 consumer special interest magazines;
- Consumer Guides, a collection of free directories of apartment, home and auto listings; and
- The Education unit, consisting mostly of secondary and continuing education content delivered via cable or film.
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