Emmis buys Texas Monthly

Folio: The Magazine for Magazine Management, March 1, 1998 by Eric Charlesworth

Mediatex Communications Corporation, the Austin-based publisher of Texas Monthly, just got a new place to hang its hat. In late January, Indianapolis-based Emmis Broadcasting signed a letter of intent to purchase the 113-employee company from Texas Monthly publisher and majority owner Michael Levy, TM editor Gregory Curtis, and Dow Jones & Company, for $37 minion plus the assumption of subscription liability. The deal, which was expected to close by the end of February, was handled by New York City-based investment banker The Jordan, Edmiston Group Inc.

Levy and Curtis -- who together launched the title 25 years ago -- have each signed multi-year deals to stay on with the 300,000-circulation magazine, which will remain in the Texas capital. "I get to continue with the terms and conditions of my parole agreement, which is to be publisher of the greatest magazine in the country," cracks Levy, a long-time Texan. Originally, Dow Jones announced its intention to sell its minority ownership in Mediatex, but then, Levy says, "a couple of things came up" that led him to get in on the action. "First of all, most buyers wanted the whole thing," he says. "Secondly, single-title publishers are an anachronism in this day." Mediatex also has a custom-publishing unit, Publishing Partnership, which could now be folded into Emmis' own custom operations.

Levy says Emmis -- which owns 13 radio stations along with a publishing division focusing on city and regional titles -- was not the highest bidder for Mediatex, but its offer was the most "attractive because of culture, respect and opportunity."

"We liked the magazine a lot," says Emmis chairman Jeff Smulyan of Texas Monthly. In fiscal 1996-1997, the magazine posted record revenues ($22 million) plus record ad pages for calendar 1997 (1,491, up 17 percent). According to "Capell's Circulation Report," Texas Monthly trails only Primedia's New York Magazine and Time Inc. subsidiary Southern Progress' Southern Living in total ad pages among regional books. For the six months ended june 30, 1997, Audit Bureau of Circulations figures show Texas Monthly averaging 265,000 subscribers and 43,000 in single-copy sales, a 17 percent bump on the newsstand over that same period in 1996.

"The tradition of the magazine is excellent, and combined with the fact that we've done pretty well in similar niches, it's a great fit," says Smulyan. Established in 1988, the Emmis Publishing arm first acquired the 45,000-circulation Indianapolis Monthly; and later the 60,000-circulation Atlanta Magazine from American Express Publishing. Last November it added 30,000-circulation Cincinnati Magazine, purchased from Cincinnati Magazine Publishing Group.

The investment in Texas Monthly seems telling of Emmis' aggressive growth plans. "We definitely win continue to look to expand," says Smulyan, hinting that more deals may already be in the works. Addressing whether the near-$40 million purchase price could be viewed as high, Smulyan says, "I haven't seen any bargains in this business yet, but I'll tell you [publishing prices are] better than radio [prices]." Emmis Broadcasting -- the nation's eighth largest radio broadcaster -- owns stations in Los Angeles, New York, Chicago and Indianapolis, and was recently awarded a license to operate the largest radio network in Hungary.

Contractually, Levy says the agreement states that "our management team win not change." But Smulyan says Emmis is likely "to look for efficiencies" between Mediatex' publishing Partnership -- whose publications include the 3.1-million circulation Outdoor Animal hunting/fishing guide for Texas' Parks and Wildlife Department -- and Emmis' own custom unit, but "it's hard to say exactly how they will tie in."