If anyone believes in the power of print, it’s clearly Hearst Magazines and its president, David Carey. On Monday, the company confirmed the speculated-about-for-more-than-a-year acquisition of 102 international titles from Lagardère SCA, most notably Elle magazine in 15 countries, including the U.S., Canada, Germany, Italy, Russia, China and Japan. The deal cost Hearst a cool 651 million euros, or $885.6 million at current exchange rates, in cash. But it also makes Hearst the second-largest magazine publisher in town after Time Inc.
Hearst will own some of the titles, enter into joint ventures on others and buy the publishing rights to the rest, including 10 editions of Elle Décor. Hearst also gets Woman’s Day, Road & Track and Car and Driver. Lagardère wasn’t willing to part with its entire portfolio, though: It will keep French Elle and retain ownership of the Elle trademark. Arnaud Lagardère, the chief executive officer and son of company founder Jean-Luc Lagardère, said in a conference call that it was a “win-win situation” for both companies. Carey was in meetings Monday — presumably to figure out what he was going to do now that he had 102 more magazines under his belt — and declined comment.
This story first appeared in the February 1, 2011 issue of WWD. Subscribe Today.
When news broke this summer that Lagardère was ready to make a deal, the financials were bleak. Revenues at Lagardère Active, the media division that houses its magazines, television and radio businesses, fell 18.3 percent to 1.73 billion euros, or $2.4 billion, in 2009. But in November, the company reported third-quarter 2010 figures that showed some improvement, with a 5.6 percent increase in revenues and ad revenue growth of around 10 percent. It was particularly strong in the U.S., Russia and China, which posted double-digit growth. As WWD reported last month, Hearst’s monthlies grew by 9.5 percent last year, outpacing every other publisher in town. The first quarter was more difficult, though, with Media Industry Newsletter numbers showing almost all Hearst’s core fashion titles down in ad pages.
A Hearst spokeswoman said the assets being acquired represented 774 million euros, or about $1.05 billion, in revenues and 49.6 million euros, or $67.8 million, in earnings before interest charges and taxes in 2010.
With the deal set to close in the third quarter, it remains unclear what will happen with staffing at Lagardère-owned Hachette Filipacchi Media U.S., starting from the top, with relatively new chief executive officer Steve Parr. And how will Harper’s Bazaar and Elle coexist? As of Monday, a Hearst spokeswoman said there is no plan to move Elle into Hearst Tower. She added it would be premature to talk about possible magazine closures or layoffs. While many Elle staffers remain in the dark about what life will be like at Hearst, it was also business as usual on Monday, as the finishing touches were made on a relaunch planned for today of elle.com, with a new layout and content.