PE not expected to bid for Time, Fortune, Money or Sports Illustrated

Don’t expect private equity to make a play for Time or Fortune or the other magazines Meredith Corp has put on the block, two bankers said.

Meredith confirmed March 22 that it has put up for sale Time, Fortune, Money and Sports Illustrated. The media company hired Citigroup and Houlihan Lokey to run the process, Reuters reported last week.

Fortune and Money produced more than $20 million in 12-month EBITDA, while Time generated more than $30 million 12-month EBITDA, Reuters said.

Meredith likely hopes to sell the magazines together but that’s unlikely, one of the bankers said. Instead, the titles are expected to be offloaded separately, with Sports Illustrated likely the easiest sell because of its swimsuit edition, the source said.

“There will probably be no PE interest,” the first banker said, referring to reports of the magazines’ dwindling fortunes.

“The magazines will not be bought by private equity. No way,” a second banker said, adding that the magazines are more a vanity-type purchase by wealthy individuals. It’s not that the magazines lose money, the second source said, but that “they are shrinking, not growing. Have you ever seen a PE firm want a business that is shrinking?”

Time Inc, the once legendary publisher, reduced the weekly circulation of its flagship magazine by one-third to 2 million copies in 2017, and also cut the print frequency of Sports Illustrated and Fortune, the Wall Street Journal said in October.

In November, Time Inc reported Q3 revenue below Wall Street expectations, the sixth straight quarter it missed analysts’ revenue targets, Reuters said.

“There might be a wealthy individual who has a magazine already. But no one else in the finance world is going to buy these,” the second banker said.

Art Slusark, a Meredith spokesman, countered that the magazines put up for sale “are not losing money. … They also have a significant digital presence with tens of millions of monthly unique digital visitors. There’s perception and then there’s reality.”

Slusark declined to provide any financial information to show the magazines’ profitability. “If any of the private equity businesses want to reach out to the bankers, they can feel free to do that. That type of information is there for serious bidders,” he said.

The sale of the magazines comes just months since Meredith acquired Time Inc in January for $1.84 billion. Koch Equity Development, the PE arm of the Koch brothers, provided $650 million in preferred equity to back the deal.

Meredith said Thursday that the magazines up for sale “have different target audiences and advertising bases, and we believe each brand is better suited for success with a new owner.”

The Des Moines, Iowa, media company said it was cutting 200 employees and planned to pare another 1,000 positions over the next 10 months.

Houlihan Lokey and Citi declined comment.

Contact Art Slusark at art.slusark@meredith.com

Photo courtesy of AntonioGuillem/iStock/Getty Images