The Hunters

Folio: The Magazine for Magazine Management, Nov 1, 2003

Byline: Michael Learmonth

DAVID PECKER

BACKGROUND: former Hachette Filipacchi CEO

BACKER: Evercore Partners

WAR CHEST: $100 million

PREY: New York magazine, consumer magazines

ROBERT KRAKOFF

BACKGROUND: Advanstar CEO

BACKER: DLJ Merchant Banking Partners/Credit Suisse First Boston

WAR CHEST: currently has $400 million company and wants to expand

PREY: healthcare, construction trades, fashion

WILLIAM J. CURTIS

BACKGROUND: consumer electronics shoppers, and now Robb Report Worth

BACKER: TD Capital and Weston Presidio Capital

WAR CHEST: $100 million-plus

PREY: New York magazine, luxury-oriented enthusiast mags, financial and consumer magazines

DANIEL MCCARTHY

BACKGROUND: former president of consumer group at Primedia, now running Network

BACKER: ABRY Partners

WAR CHEST: $100 million

PREY: regional shelter mags, city mags

WILLIAM F. REILLY

BACKGROUND: former Primedia CEO; now collecting enthusiast books

BACKER: Providence Equity Partners

WAR CHEST: undisclosed; looking to assemble $500 million enthusiast media company

PREY: hobbyist magazines in genres such as knitting, pets, equestrian, graphic design

KELLY CONLIN

BACKGROUND: former CEO of IDG

BACKER: Providence Equity Partners

WAR CHEST: undisclosed, said to be several hundred million

PREY: b-to-b publishing, business data services

CAMERON BISHOP

BACKGROUND: former president and CEO of Intertec Publishing

BACKER: JP Morgan Partners War Chest: undisclosed; seeks to build $100 million to $150 million company

PREY: magazines and conferences in healthcare, business services, and transportation industries

CLAY HALL

BACKGROUND: former Cowles vice president; sold Southwest Art magazine

BACKER: Frontenac Partners, BMO Halyard Partners, Catalyst Investors

WAR CHEST: $50 million

PREY: seeking 50 percent market share in hobbyist categories, such as boating, camping, horse breeding, fitness, health, sports, and photography.

NEIL VITALE

BACKGROUND: former president of Petersen Publishing Backer: Nautic Partners

WAR CHEST: "We've not looked at anything [either] because it's too big or too small."

PREY: medical magazines

For months the would-be magazine moguls have been scouring the forests of media-land, stalking their quarry. For some, the prey is a 10-point group of b-to-b trades upon which to build a business-publishing empire. For others, the prize is a flock of enthusiast magazines, with their devoted readers, endemic advertising, and relatively steady performance. Then there are the big-game stalkers, looking to bag that rare consumer title for a trophy kill.

It's hunting season, and for the first time since the ad recession sent valuations plummeting, the prey are coming out of hibernation. "The buyers have always been there," says Admedia Partners managing director Mark Edmiston.

"It's the sellers that have been hiding." Even the most beaten-down b-to-b publishers have resisted selling properties they clearly no longer want because prices have been so low. "The multiples that were being paid in the past are no longer the multiples they can get for their businesses. As a result, they have been reluctant to sell because hope springs eternal," says Joe Walker, a lawyer who specializes in magazine transactions.

But there are signs of movement. One of the most telling developments this fall: Thomson Media CK, fresh from the sale of its medical trades to Advanstar (for a healthy nine times EBITDA), is preparing to put its financial publications back on the block - properties it withdrew when it only received low-ball bids in 2001. "A lot of sellers were holding out for a rebound to the levels of 1996 and 1997," says Bill Curtis, CEO of Curtco Robb Media. "Now they see that's not going to happen because it's going to be a long wait for the economy to come around. That makes not selling a present-value-of-money issue, so they're more likely to divest."

The sellers are ready. Who will the buyers be? In addition to corporate acquirers, the woods are full of entrepreneurs and small groups of publishing veterans who have been waiting to get back in the game. Many are treading the path blazed by companies such as Primedia Inc. (publisher of Folio:). The formula is straightforward: Acquire a group of magazines that will serve as a platform for further expansion. Then bolt on more assets, use scale to gain efficiencies, and in a few years, look for a "liquidity event" to pay off equity partners and bankers. "But you have to have the platform," cautions Bill Reilly, a cofounder of Primedia precursor KIII Media and now chairman of Aurelian Communications, a private-equity-based magazine venture specializing in enthusiast titles.

The current crop of mogul wannabes include Bill Curtis, former Petersen chief Neil Vitale, former Working Woman CEO Jay MacDonald, Clay Hall, a former Cowles exec, former Reed Exhibitions president Paul Mackler, and Kelly Conlin, former chairman of International Data Group. It also includes former Primedia execs Cam Bishop and Dan McCarthy. Each of these deal seekers has lined up sources of private equity, leased office space, printed business cards, and taken meetings. Mostly, however, they've been waiting. "It's been a two-year process," says Vitale, who is backed by Nautic Partners. "But I would rather wait and find the right property than jump into something."