Exclusive: Imagine Media looking again to buy U.S. titles

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Imagine Media's last big push into the U.S. market imploded spectacularly. But the former publisher of Business 2.0 and ill fated launches like Total Movie, T3 and Revolution secured a $50 million line of credit this spring and is trolling anew for deals in the States.

"That's just a starting point," said Imagine President Jonathan Simpson-Bint, who spoke of the potential to raise more money via additional stock issuance-likely a necessity, since $50 million would not go far in terms of building up a company via acquisitions.

Imagine Media counts gaming books like PC Gamer and Official Xbox Magazine within its current U.S. five-title portfolio, and Mr. Simpson-Bint said "I don't think it's any secret we'd be into [acquiring Ziff Davis Media's] gaming magazines." (Dale Strang, senior VP of Ziff Davis' GameGroup said his titles were "absolutely not" for sale.) Other areas for potential acquisitions, Mr. Simpson-Bint said, are a wide array of titles aimed at men 18 to 35.

"It could be anything from wood-working to auto-related stuff," said Mr. Simpson-Bint, as well as "sports and extreme sports."

Imagine, the U.S. arm of the publicly-traded British company Future Network PLC, was another too-much-too-soon tale from the dot-com boom. In 2000, flush from the profits of Business 2.0-which, according to executives inside and outside the company, were around $40 million in '99 alone-it launched five titles in the U.S. In February '01, the company shuttered all five plus a Sega Dreamcast magazine, said it would lay off more than 300 employees, and then went through a public and protracted sale of Business 2.0, which ended with Time Inc. purchasing it for $68 million in June 2001.

A March 18 presentation from Imagine, which is changing its name in September to Future Network USA, said that in January '01, when the company still published 13 magazines, it employed 439. In March '02, the company employed 105. "It was a terrible world," Mr. Simpson-Bint said.

"The company was in pretty dire straits," said Paul Richards, who follows Future for London's Numis Securities, adding that debt at one point hit about $120 million, and Future's shares went from around $12 to around 31 cents. Future Networks closed on August 8 at 53 pence, or 82 cents.

"It needed to be refinanced to remove the excess debt, which it did," said Mr. Richards. This was accomplished via a British mechanism of selling additional stock to shareholders at what Mr. Simpson-Bint said was "a significantly reduced price."

"We're big fans of Future Networks," Mr. Richards said. But he sounded very wary of Imagine's plans to re-expand in the U.S.

"We would have to be shown exactly why it was a good idea," he said. "This is a company that, less than a year ago, had to go cap in hand to shareholders to prevent it from spiraling into liquidation."

`stick to their knitting'

"We'd rather see them stick to their knitting, and do things closer to home," Mr. Richards concluded. (Imagine's expected to post revenue of about $55 million in the U.S. in 2002, which Mr. Simpson-Bint said would represent about 30% of Future's total.)

Stateside observers are skeptical too. The deal market is not exactly glutted with tech or extreme sports titles looking for a new home, although the stressed states of Ziff Davis Media and Primedia may give potential buyers hope that will not always be the case.

And one deal-side executive said recent months have seen several executives backed with private-equity money in search of deals, almost all of whom have yet to strike their first deal.

Mr. Simpson-Bint concedes this point. "The market is really quiet right now."

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