Primedia to Buy Former Petersen Magazines

New York-based Primedia Inc. has agreed to acquire the U.S operations of British publisher Emap for $505 million in cash plus warrants, sources close to the situation said Sunday.

The deal, expected to be announced today, would make Primedia one of the nation’s largest magazine publishers and continue an ongoing consolidation trend in the media industry.

Primedia, with $1.7 billion in 2000 revenue, publishes Seventeen, New York and American Baby, along with nearly 230 other special-interest magazines designed to appeal to everyone from fishermen to car buffs.

Emap USA, formerly Los Angeles-based Petersen Publishing, reported an estimated $350 million in revenue for the fiscal year ended March 31. The company, which is now based in New York but has a strong Southern California presence, publishes about 60 specialty publications, including Motor Trend, Hot Rod, Teen and Guns & Ammo.

It was uncertain on Sunday how many companies had bid for Emap USA, but at least two others were believed to have made offers. Parent Emap is Britain’s largest publisher of specialized consumer magazines.

Primedia has agreed to pay $515 million for Emap USA, sources said, including $505 million in cash and the rest in warrants. The price is considerably lower than the $1.2 billion that Emap paid for Petersen in 1998.

Since then, though, the British publishing company has had difficulty achieving the economies of scale and other competitive advantages that it had anticipated when the Petersen deal was completed.

Although Primedia is expected to sell off some titles, industry observers said most of the titles published by the two companies don’t compete either for readers or for advertisers. Neither Primedia nor Emap executives were available for comment Sunday.

Emap USA has about 700 employees in Southern California; Primedia has about 600 employees at its publishing and media operations in Los Angeles. The combined companies would have more than 7,500 employees.

As is the case with most media acquisitions, Primedia is expected to seek economies of scale by blending purchasing, sales, production and circulation departments.

Primedia is said to view Emap USA as integral to its ongoing attempt to use traditional media properties as a springboard for new media, including the Internet and video.

Primedia Chairman and Chief Executive Tom Rogers, who joined the company in 1999 after serving as head of NBC’s Internet and cable operations, has been trying to turn Primedia’s mix of titles into content that can be served up on the Web and through cable television services.

Primedia has said that its blend of magazines, which have strong appeal to hobbyists, is less likely to be hurt by downturns in the overall advertising market. Primedia is expected to benefit from the presence of national brand advertising found in Emap USA’s magazines.

For the last two years, Rogers has been trying to use Primedia’s Internet arm, including its Web site About.com, to build an online presence for its specialty magazines. Primedia also produces content for cable television and owns the Channel One network, which distributes news and information to schools.

Primedia’s shares, which trade on the New York Stock Exchange, closed Friday at $6.79. The stock is well below its 52-week high of $22.75.