Primedia to Separate Net Investments in Restructuring

Primedia Inc., whose properties run the gamut from New York Magazine to American Baby magazine, moved Wednesday to reposition itself as a new-media conglomerate by restructuring its business lines, separating its Internet investments from its more traditional magazines and other products.

The change was announced as the company reported a fourth-quarter overall loss of $52.1 million, or 45 cents per share, on revenue of $455.6 million. That is nearly quintuple the loss for the same period a year earlier, but it includes a write-down of $275.8 million in the value of its Workplace Learning unit, which produces training and informational videos and which the company acquired in 1996 for $422 million.

The company said its fourth-quarter earnings before interest, taxes, depreciation and amortization--or cash flow--in continuing operations in traditional media rose 10.4% to $111.3 million from $100.8 million a year earlier. For the year, those operations’ cash flow increased 11.5% to $341.9 million from $306.7 million for 1998.

Primedia shares closed at $18.19, up 50 cents, Wednesday on the New York Stock Exchange.

New York-based Primedia is in the midst of a major restructuring aimed at turning it into a purveyor of niche content to the Internet and digital cable operators. Leading the move is Chairman and Chief Executive Tom Rogers, who joined the company last year after serving as head of NBC’s Internet and cable operations.

One of Rogers’ main tasks is to demonstrate to investors that the company’s motley mix of magazines and information services can translate into content on the Web and interactive TV in a way that encourages viewers to purchase merchandise.

“We’re trying to show the market that not all content is created equal,” Rogers said in an interview, arguing that viewers of a Primedia feature on, say, fly-fishing, are more likely to make a related interactive purchase than are viewers of mass content on the Web or TV. “Our content is highly connected to people’s willingness to buy,” he said.

Along with its earnings, the company announced several new media ventures. Its Channel One News, which distributes news and information video segments to 12,000 schools, has struck a deal to provide topical teen-oriented segments to CBS’ “The Early Show,” the network’s morning program.

Primedia also said it will be an investor in Contentville.com, a partnership headed by Steven Brill, founder of the American Lawyer and Brill’s Content magazines. The Web site will aggregate and sell viewers material from Primedia magazines as well as from CBS, NBC and other publishers, beginning later this year.

And the company said it has reached an agreement with Albertson’s Inc., the operator of 2,400 supermarkets nationwide, including 470 in California, allowing the exclusive distribution of its Apartment and New Homes guides at Albertsons locations. The guides are free local listings of available apartments and homes.

Rogers said the separate reporting of Internet results will enable the company to eventually spin off those operations or encompass them in a tracking stock. Such Internet-only stocks have lately been granted unusually high market valuations from Wall Street.