HACHETTE POURS EQUITY INTO PHASE2MEDIA: INVESTMENT IN NET AD REP FIRM OPENS GLOBAL WEB STRATEGY

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Hachette Filipacchi Medias, parent company of U.S.-based Hachette Filipacchi Magazines, has acquired an equity interest in start-up Internet ad rep company Phase2Media-its first step toward creating a global Internet strategy.

With the deal, 6-month-old Phase2Media completes its first round of funding. HFM joins Vector Capital and Starwood Capital Group; the three are believed collectively to be investing an estimated $10 million.

"This relationship centers around the fact that we have a global Web brand in Elle.com, and we want a global rep firm to represent that. This alliance cements HFM's position as a global publishing brand," said Hachette Filipacchi Magazines President-CEO Jack Kliger.

SIMILAR GOALS

Phase2Media was hired to represent Elle.com in June, and through that affiliation HFM executives discerned that the rep company's approach to Internet advertising sales was similar to its own goal.

"We invested in this company because we wanted to improve our learning and profit from the experiences of the early adopters.

. . . It also underscores HFM's willingness to make Internet investments," Mr. Kliger said.

With HFM on board as a strategic partner, Phase2Media believes it can achieve international growth much faster than was possible before. Chairman-CEO Richy Glassberg now has access to HFM's offices in 80 countries.

"We'll be able to compete where we choose," Mr. Glassberg said. "It's a great catapult for us. The global business is a very dynamic business and Hachette is moving very aggressively," Mr. Glassberg said. "They are making a commitment to the Web and want to use our expertise to support them."

DEALS OUTSIDE HFM

Although HFM is a partner in Phase2Media, that will not preclude Phase2Media from continuing to represent non-HFM Web sites. Currently, the company sells advertising for 41 Web sites, including Dennis Publishing's Maxim (maximmag.com) and the official Sydney 2000 Olympic Web site (olympics.com).

Earlier this year, Hachette's U.S. division shut down its ellemag.com site so that the international site, Elle.com, could prevail. Elle.com is now available in several languages, including English, French, German and Japanese.

In the U.S., HFM New Media will continue to have its own operation headed by VP Don Perry, Mr. Kliger said. Phase2Media's first assignment is to create a platform to launch Elle.com, but sales responsibility for other properties may be switched as the partnership continues.

"We want to walk before we run," Mr. Kliger said. "We are evolving the strategy for the U.S. brands. Right now, the others aren't part of this agreement."

Phase2Media already has logged some early success for Elle.com, including the first online buy ever from Chanel, and the first buy by Nieman-Marcus Group on

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