I met earlier today with OpenGate CEO Andrew Nikou, who was in New York for undisclosed reasons (it probably rhymes with “booze leak”). He told me that TV Guide was unprofitable and generating double-digit losses when acquired by OpenGate, in a deal that included around $50 million in assumed liabilities. Now, however, the slimmed-down company apparently is generating income in the mid-to high single digit millions.
“It was the gem that not many people realized existed,” Nikou said. “Four to five years ago they were a $500 million business, but they’ve downsized to reflect the current business model.”
Indeed, cutting back has been TV Guide’s path to profitability. Its ad pages, for example fell 16% year-over-year, according to data from Media Monitor.
Paid circulation also dropped, from 3.2 million in 2008 to 2 million today. Nikou acknowledged the circ figures, but argued that it was a planned pruning in which the company eliminated unprofitable subscribers to focus on “clean” ones. Moreover, he said the company refocused on “TV enthusiasts” who still consider TV Guide as the source to find “what’s worth watching.”
While OpenGate is known for its TV Guide investment, the firm also invests in energy, technology, consumer, specialized manufacturing and paper. Earlier this year, OpenGate bought fashion brand Nicole Farhi from French Connection for up to $7.5 million. Farhi generated operating losses of £5.6 million for the year ended Jan. 31. “We like change intensive industries,” Nikou said.
So what media company does he wish he had bought? BusinessWeek, for which OpenGate was outbid late last year by Bloomberg LP ($5m deal with a reported $10m in assumed liabilities).