Sale by Primedia Continues Debt-Reduction Plans

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NEW YORK (AdAge.com) -- Hearst Magazines today purchased Seventeen magazine and related businesses from Primedia for $182.4 million, capping off the year's most closely watched magazine sale.

While Seventeen, with a circulation of 2.5 million, ultimately fetched a healthier price than had been expected by industry watchers, the deal still fell short of Primedia's earlier hopes of a $200 million payday.

The non-bidders
The deal was notable for the companies

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that chose not to bid for one of the magazine world's most recognizable brand names. Time Inc., publisher of Teen People, and Conde Nast Publications, publisher of Teen Vogue, passed on the title. In the past Conde Nast had expressed interest in buying the title from Primedia on at least one occasion, said an executive familiar with the situation.

Hearst has taken a new, aggressive stance on acquisitions. Last May it bought the independent shelter title Veranda for $40 million. Prior to that, their last acquisition came in 1986, when the publisher bought Esquire. It recently hired former Time inc. divisional president John Hartig in an executive role to specifically oversee acquisitions and business development.

Sagging newsstand sales
While many executives expressed disappointment with the state of Seventeen's circulation -- concerns that Primedia's executive vice president, Linda Platzner, has dismissed -- Hearst's clout in distribution could give a boost to the title's sagging newsstand sales, which fell 24.1% for the last six months of last year. Hearst's extensive holdings of women's titles, which include Cosmopolitan, Marie Claire and Harper's Bazaar, could also give Seventeen a boost with fashion and beauty advertisers, unlike its previous owner.

It remains to be seen what the deal means for Hearst's other teen girl title, CosmoGirl, which has been rising rapidly. Its circulation now stands at 1.1 million, and last year its ad pages increased 19.6% to 683.4.

Reducing debt
Primedia, publisher of titles such as New York, Guns & Ammo and scores of other niche magazines, is controlled by buyout firm Kohlberg Kravis Roberts & Co. Primedia in 2002 divested $250 million worth of properties it had promised in the wake of its 2001 acquisition of Emap USA. The net of its divested properties, which included Chicago magazine, the American Baby Group and Modern Bride ended up being $345 million, which was put toward its long-term debt load now around $1.75 billion.

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