Magazine Marketplace: A highly selective industry chronicle

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

THE DEALS

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American Media agrees to acquire Weider Publications for $350 million Acquiring Weider Publications, publisher of seven muscle and health magazines, including Shape and Men's Fitness, sets American Media, owner of supermarket tabloids The Star and The National Enquirer, squarely among the top M&A spenders of 2002. American Media CEO David Pecker has been trying to return to consumer publishing for a while now - most notably through failed bids for Emap USA and the Times Mirror magazine group (see Q&A, page 25). American Media, backed by Evercore Partners, will pay a multiple of approximately 13 times earnings.

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Advanstar Communications acquires Salon News from Fairchild Publications This 77,000-circulation monthly for beauty-salon professionals fits in snuggly with Advanstar's American Salon, American Spa, and the International Beauty Show New York trade expo. "We've done three transactions this year where people have given up on properties that we think have value," says Advanstar CEO Bob Krakoff. "For us, it's an opportunity to take over products to create stronger assets." - Sarah Gonser

THE DEVELOPMENTS

THE KABLE GUYS

After much hand-wringing about who would buy EDS's subscription fulfillment services - and when, and why - late last year the Amrep Corporation, whose Kable News Company subsidiary is one of the Big Four magazine-subscription-fulfillment houses, announced that it was in negotiations to acquire the troubled business. Charles Mast, senior vice president for consumer marketing at Ziff Davis Media, an EDS client, says: "I'm glad it appears that the sale is nearing completion. I think it's the best thing for the clients and for the industry, and it will provide more opportunities for publishers." By press time, a final agreement had not been reached. But three sources said they believed a deal would be completed during the first quarter of this year, possibly as early as this month. OUR TAKE: The deal, which would reduce the number of major U.S. fulfillment houses to three - Kable, Communications Data Services, and Palm Coast Data - appears to be a win-win situation: Kable increases its market share (although it may have to pour some money into the EDS biz), and EDS clients get, in Kable, a parent company that actually knows a thing or two about subcription fulfillment. - Geoff Van Dyke

COPYRIGHT POLICE BLOTTER

Legal troubles are mounting for alleged copyright crook Greg Wilson Kessler. He's being sued by science and academic publishers Elsevier Science, Wiley Publications, and the American Chemical Society, which allege that Kessler has been selling copies of their high-end journals in PDF format and never paid them a dime. Kessler's been targeted by the publishers before - the first time as a partner in Kessler-Hancock Information Services in Davis, California, and now as the founder of GK Documents in Sacramento. "We were surprised to see Kessler set up shop again," says Mark Seeley, general counsel for Elsevier Science, publisher of The Lancet and 1,700 other journals. Seeley says the Kessler action, coordinated by the Copyright Clearance Center, is part of a global effort to crack down on copyright theft. Kessler says he's registered with the Copyright Clearance Center and has been paying royalties faithfully. "I'm being scapegoated," he says. "They haven't seen a whole lot [of royalties] from me because I'm still a start-up and don't have a lot to declare." OUR TAKE: Keeping track of PDFs is a big challenge for the copyright cops; Kessler should probably keep a lower profile by not naming his businesses eponymously. - Michael Learmonth

DIGESTING HOLLYWOOD

Hollywood has long mined magazine articles for script material. Recently, though, some have tried to formalize a relationship a la Talk-Miramax and Maxim-New Line. In the latest and one of the most wide-ranging efforts, Reader's Digest inked a deal with the William Morris Agency to bring the RD brand to, as RD's Frank Lalli explains, "every media-distribution channel imaginable. We're looking to gain a regular presence on television," he says, having just returned from two days of meetings with a roster of producers and directors in Los Angeles. Among the first ideas being considered are made-for-TV movies based on the inspirational true stories oft present in RD's pages. Also discussed: a magazine show, a game show based on the RD word puzzles, and programs based on the "RDLiving" departments on personal finance, food, and health. OUR TAKE: RD is the closest thing to a print manifestation of mainstream television, but does the brand convey as much meaning as other magazine-turned-TV brands, such as National Geographic and Sports Illustrated ? We're skeptical. - ML

AMAZONIAN FEAT

Amazon.com vastly expanded its periodicals business last November, adding more than 50,000 titles, including Folio:, to its virtual racks. (Amazon's fulfillment partner is EBSCO.) Everyone else who is pushing subs on the Internet - with the exception of AOL, which hawks on behalf of Time Inc. - may now just become an also-ran. Amazon's one-click convenience (and the massive pool of credit-card numbers that drives it) makes subs an impulse buy again for the first time since sweepstakes went away. Amazon now cross-sells subs with books; once it starts cross-selling with apparel, electronics, and music - in all cases tailored to a customer's shopping history - the future will be now. But that future won't include continuous service, at least not yet. Amazon won't say why, but the company will rely on e-mail rather than snail mail to urge renewals. OUR TAKE: Amazon has all the technology and expertise in place to build a subscription business that works. Publishers should be cheering it on. - Greg Lindsay