Goldman's move, should it happen, could play a major role in restructuring the magazine world.
Executives familiar with media deal finances say Goldman's $1 billion could be leveraged into $4 billion by enticing aboard banks or debt players.
The magazine industry, unique among all major media, remains a domain of many privately held and family controlled businesses, one that has largely resisted the wave of consolidation that's swept the business world in the past two decades. At least one magazine executive familiar with Goldman's plans sees its dollars as a way to consolidate the industry's mid- and lower-level players.
A Goldman spokeswoman declined to comment on any aspect of this story.
Goldman representatives told some magazine executives it wants to focus on specialty consumer and business-to-business titles. One likely target: Primedia, the publicly traded company controlled by investment banking firm Kohlberg Kravis Roberts & Co. At the close of market Feb. 15, Primedia's stock price was $2.55, making its market cap just $623.5 million, although its long-term debt exceeded $2 billion as of last Sept. 30. A KKR spokeswoman declined to comment.
`Roll of the dice'
"This is all a roll of the dice," said one top executive familiar with Goldman's moves and their potential to spur consolidation during the industry's current trying times. "There's a lot of good reasons it should happen. But a lot of it is extremely complicated."
On Goldman's CEO wish-list, said executives who've heard or seen it: Don Logan, chairman-CEO of AOL Time Warner's Time Inc.; Conde Nast Publications President-CEO Steve Florio; Hearst Magazines President Cathleen Black; Hachette Filipacchi Media President-CEO Jack Kliger; Fairchild Publications President-CEO Mary Berner; Gruner & Jahr USA Publishing President-CEO Dan Brewster; Time Inc. Exec VP Mike Klingensmith; American Media Chairman-CEO David Pecker; and former Ziff Davis Media Chairman-CEO Jim Dunning. The package dangled: $45 million over five years, plus profit and equity upsides.
It's not known if all of the executives on the wish-list were contacted, but some on it report receiving entreaties from recruiter Seiden Krieger Associates, which is handling the executive search. "I cannot comment on any client matters," said President Steve Seiden, who added his response did not constitute a tacit admission his firm was involved.
"We had a lunch and discussions, and it didn't go any farther. I am an owner and a very happy shareholder with my partners Evercore [Capital Partners], and I have no intention of leaving" said American Media's Mr. Pecker. "I wish Goldman the best of luck." Two other top executives privately confirm being approached about the venture.
Having a brand-name magazine veteran is critical, magazine observers said, for the venture's credibility as a long-term player.
"They want to get someone in place and build the infrastructure by the summer," one executive said. "The money is the most important thing. They have that already."
Goldman is no stranger to the media world. It's a leading investor in Village Voice Media, parent company of Manhattan's Village Voice and six other alternative weeklies. One executive familiar with the media-deal market said Goldman was a bidder on the European magazine company IPC Group Ltd., which Time Inc. purchased last year for $1.6 billion.