The deal was reported on AdAge.com on March 29.
The move is billed as a merger, in which Powerful Media's investors and equity holders will receive an unspecified stake in Brill Media Holdings. Powerful Media, which launched last year with $30 million in funding from venture capital heavies Flatiron Partners, among others, has about $10 million in cash. Mr. Brill did not comment on questions about how the deal valued Powerful Media.
Last year, according to executives familiar with the financials, Powerful Media took in between $1 million and $2 million in revenues and lost about $18 million.
The deal is a complex play between Mr. Brill's Brill Media Holdings and Media Central, the aggregation of about 170 media properties majority-owned
|Steven Brill plans layoffs as he merges two magazines.
Brill's Content will be renamed Inside Content and Inside will be folded into it. Mr. Brill stressed aggressive plans to transform Inside.com into a tiered subscription model. Inside.com launched last May as a stand-alone news site staffed by veteran journalists covering a broad range of media topics. It will now serve as the de facto portal to Media Central's Web sites.
Layoffs will occur, Mr. Brill confirmed, across "both entities," meaning his properties and Powerful Media's. "In some areas, we are overlapping," he said.
Though offers will be made to Inside.com editorial staffers for positions at some of Media Central's trade titles, such as Cable World and Folio:, it's not yet known how many staffers at Inside.com will accept them. Inside.com personnel present at the press conference studiously avoided comment on what sort of offers they had received in the wake of the deal.
Kurt Andersen, co-founder of Powerful Media and new vice chairman of Brill Media Holdings, said he expected "the great majority" of Powerful Media's editorial staffers to come over to the new company, and said he had a two-year contract with the company. Mr. Andersen's co-founder Michael Hirschorn, editor-in-chief of Inside.com, will stay on with the new company and also have the title of vice chairman.
Both magazines cease publication
Both magazines will stop publication -- though Mr. Brill said the June issue of Brill's Content will come out -- and Inside Content will debut at an as-yet-undetermined time later this year. Mr. Brill said the rate base, or circulation guaranteed to advertisers, of the new magazine had not yet been determined.
Paid subscription model
Mr. Brill said that after the deal Inside.com will offer abbreviated headlines of the day for free, and that subscribers to Media Central publications would be entitled to access more content, and that additionally, subscriptions would be sold across specific channels of coverage, such as books or magazine. He offered no details on pricing levels.
The deal marks the end of Inside.com in its current form, in which a full-time staff of abour 90 churned out highly regarded editorial coverage of media industries from music to magazines, and in which virtually all of the real-time coverage was free. Yet its subscriptions never met expectations, and judging from one staff reporter's comment at the press conference, the magazine's may not have, either.
David Carr asked Mr. Brill why he was "adopting the DNA" of a magazine with negligible advertising and paid subscribers.
Stand-alone models don't work
"It is clear standalone Internet models do not work," said Primedia CEO Tom Rogers at the press conference. Seated near him on the dais were Mr. Andersen, who looked down, and Mr. Hirschorn, who grinned.
Primedia's stock closed March 30 at $6.30, after hitting a 52-week low of $6.25 on March 29.
Absent from the press conference was Deanna Brown, Powerful Media's CEO, who will take a high-priced consultancy job with Brill Media Holdings that will last through the summer. Ms. Brown had been publisher of Brill's Content before joining Powerful Media.
Mr. Andersen is also no stranger to Primedia -- he was fired from the company's New York Magazine, where he had been the editor in chief. Asked about his new relationship with the company as part of Brill Media Holdings, Mr. Andersen waxed philosophic: "Life's an adventure -- and full of ironies."
While press reports had Powerful Media shopping for a deal earlier this year, the deal talks with Brill heated up significantly in the past couple of weeks.
As the deal came to a conclusion last week, Inside staffers were at work on the next issue of a magazine -- with a now-slightly-ironic cover story touting "SYNERGASM."