Primedia Inc. flatly denied to Media Business recent rumors that the sale of its Primedia Business Magazines & Media unit has gotten off to a rocky start. Investment bankers have said that there has been tepid interest in the properties and that a deal may not happen in the near future.
"Primedia has been more than pleased with the interest it has received so far in its Primedia Business properties by prospective bidders," said Elliot Sloane, president of Sloane & Co., Primedia’s public relations agency.
"Moreover, final bids aren’t due until July, and currently the company is engaged in a very active process of due diligence to screen and respond to several initial bids."
There is wide agreement in the investment banking community that because Primedia Business does not sit on as strong a financial footing as Hanley Wood or Canon Communications, it may not garner the high EBIDTA multiples—said to be in the 12-times range—both of those companies received. One problem facing Primedia Business is a lack of powerful, No. 1 brands in its stable, according to several investment bankers.
Still, Primedia Business has performed well lately, generating $224.8 million in revenue last year, up 1.5% from 2003, and posting an increase in its EBITDA of 6.6% to $37.4 million.
Some doubters say Primedia may just not be fully into making a deal right now.
"Kelly [Conlin, Primedia CEO] has always insisted that this was an exploratory process to assess Primedia Business’ strategic options," said Robert Crosland, managing director of media investment bank AdMedia Partners.
"When private equity money has been invested in a business for an extended period, as is the case here, every window of opportunity has to be considered. That doesn’t necessarily mean this is the best time for Primedia to sell."
Crosland noted Primedia Business has significant market positions in industries, such as telecommunications, that have yet to recover. "Once those rebound, the Primedia b-to-b unit will be much more attractive," he said.
Primedia put its business unit—which includes some 70 publications, more than 100 Web sites, 25 events and 50 directory and data products—on the market in late April and hired Credit Suisse First Boston to help it explore a possible deal.
Rumored suitors include two companies run by former Primedia executives: Apprise Media, which recently acquired Canon Communications, and Ascend Media. Others said to be interested are Citibank Venture Capital, Warburg Pincus and Boston Ventures.
Media Editor Sean Callahan contributed to this report.