Maxim magazine, the bawdy men's title that went up for sale in March, is fetching some bids of about $20 million, less than a 10th of the price its owners paid six years ago, according to people familiar with its finances.
Maxim publisher Alpha Media Group, controlled by creditor Cerberus Capital Management, is expected to lose between $3 million and $5 million this year, according to the people, who asked not to be named because the matter is confidential.
The magazine's owners are seeing yearly revenue declines as Maxim, once a leading men's title, contends with an industrywide downturn in marketing dollars. Advertisers and readers have shifted their attentions toward digital venues, where ad rates are cheaper and the content largely free.
Maxim's annual print ad revenue dropped an estimated 18% to $112 million last year, compared with an estimated 2.9% slide among magazines as a whole, according to the Publisher's Information Bureau, which bases its figures on publicly-quoted ad rates. In the first three months of this year, Maxim saw a 45% decline from a year earlier to $13.1 million.
The owners have continued to cut costs and are trying to contain losses within the range of a few million dollars, according to the people familiar with the company's finances. A number of companies made qualifying initial bids, with second-round offers due July 15, these people said.
Competition from the internet has hurt magazine advertising, and Maxim, now led by former Hachette Filipacchi Media U.S. CEO Jack Kliger, hasn't fully capitalized on the growing digital audience.
"Maxim does not comment on rumor or speculation, but we can confirm that Maxim is in discussions with a strong group of highly-engaged, potential buyers," Publisher Benjamin Madden said in an email.
Mr. Madden said when Maxim went on the block that the most important component is the brand's investment in digital -- "not just pure dot com but pushing our video content," he said then. Maxim video is available on platforms including YouTube and Xbox Live, while its tablet edition is the second-largest by paid circulation in the industry, trailing only Game Informer Magazine.
Felix Dennis, the British publishing impresario, founded Maxim in 1995 and introduced it to U.S. audiences a few years later, luring in readers with the tagline "Sex Sports Beer Gadgets Clothes Fitness." Its immediate success kicked off a wave of similarly themed titles and prompted U.S. men's magazines to adjust their editorial voices to follow suit.
Dennis sold Maxim, along with sister titles Blender and Stuff, for $250 million in a leveraged buyout by an investment group led by Quadrangle Capital Partners in 2007 -- just before the recession gutted the magazine industry's profits as it faced a steep drop in the ad market. The owners have since closed down Stuff and Blender.
In 2009, Quadrangle stopped payments on about $160 million of loans used to buy the magazine company, leaving creditors, led by Cerberus, as its new owners, according to one of the people. Peter Duda, a spokesman with firm Weber Shandwick that represents Cerberus, declined to comment.
Maxim reduced the paid circulation it guarantees advertisers to 2 million from 2.5 million this year, a 20% drop, while trimming frequency to 10 issues in 2013 from 11 in 2012 and 12 in 2011.
While it's still one of the largest men's magazines by circulation, it saw a 22% drop in ad pages to 392 last year, compared with a year earlier, according to Publisher's Information Bureau. Conde Nast's GQ, another men's title, saw a 3.5% drop in ad pages to 1,183, according to the Bureau.
~ Bloomberg News and Ad Age staff ~