Times Mirror suitors come calling

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Times Mirror Magazines may not be the most attractive offering on the auction block, but the Tribune Co. unit has still caught the eye of several suitors.

Gruner & Jahr USA Publishing, Hachette Filipacchi Magazines, American Media, Emap USA and Ziff Davis Media are among the potential bidders. There are also rumors of a management buyout, although Times Mirror insiders declined comment on that possibility.

Would-be buyers last week received their first looks at the "black book," from Merrill Lynch & Co., with detailed financial information on the magazine group.

LOCAL STRATEGY

After its acquisition of Times Mirror Co., parent of the Los Angeles Times, Tribune Co. announced in late June that it would explore a sale of the magazine division since it does not fit the company's local-media strategy. Times Mirror Magazines' titles include Golf Magazine, Popular Science, Ski, Skiing and Today's Homeowner.

"I suspect [Tribune Co.] would like to see a price in the $400 million to $500 million range," said Reed Phillips, managing partner of media investment company DeSilva & Phillips. But he said a price closer to $300 million would be "reasonable."

Other observers said they expect the sale to close at a much lower price, possibly as low as $200 million. The publishing group posted 1999 revenue of $278.9 million and operating profits of $19.1 million, a profit margin of just 6.8%.

GOOD FIT FOR EMAP

Mr. Phillips said Emap "is the group that has the most at stake in buying this business," citing a good fit with existing titles.

Officials at Emap declined to comment.

Jim Spanfeller, president of Ziff Davis Media's consumer magazine group, confirmed his company's interest in the titles, as did a spokesman for American Media, publisher of the National Enquirer and Star. Executives at the other potential bidders either would not comment or could not be reached by deadline.

A Tribune spokeswoman declined comment on the sale.

The Times Mirror magazines that have attracted the most interest are the upscale and youth-oriented titles, particularly Golf and the skiing publications.

Others present suitors with significant challenges. Field & Stream and Outdoor Life were reliant on Philip Morris USA's cigarette advertising for 7.6% and 8.5%, respectively, of their total 1999 ad revenue. Both titles were on Philip Morris' hit list earlier this summer when it pulled advertising from dozens of magazines.

BAIT AND BULLET TITLES

The so-called "bait and bullet" magazines draw a substantial chunk of ad dollars from "tobacco and Detroit," said an executive at another magazine company, referring to the automotive business. "Both [categories] are way off."

Those familiar with the Times Mirror operation said the company is well-run and that buyers would not have much fat to cut as they seek to grow profits. "A strategic player might be able to save $10 million," said one industry executive, "mostly because of consolidating functions."

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