Hearst has agreed to buy Rodale Inc., in a deal that was widely anticipated by the magazine industry. While there was no mention of the sale price, it is believed that the company sold for well under $250 million.
Rodale, which is based in New York and Emmaus, Pa., publishes Men’s Health, Women’s Health, Prevention, Rodale’s Organic Life, Runner’s World and Bicycling. It also includes Rodale Books and an international division with which Hearst already has a joint venture. The company boasts 93 editions in 64 countries. Hearst Magazines includes 300 editions and web sites around the world, including 20 titles in the U.S.
Insiders said the New York-based Hearst absorbed Rodale’s hefty, unfunded pension liability, which is in excess of $30 million in debt, a string of bad real estate deals and vendor contracts with various partners such as Quad, CDS, Cognizant and Axiom, as well as the liens and liabilities against Rodale out in Emmaus. So, in the end, the deal may have closed at around $100 million or less. One source characterized the deal as a “stunning collapse” of Rodale. The collapse is indicative of a broader change in the magazine industry, as smaller publishers, such as Wenner Media, are now closing or selling off titles.
In June, Maria Rodale, chairman and chief executive officer of Rodale, said it was initiating a process to explore its options, which included putting the family-owned publishing house up for sale. Word on the street was Rodale had the banks breathing down her neck to repay loans that had come due. Over the summer, a handful of bidders circles the struggling company, including Hearst, Meredith Corp. and American Media Inc.
Although some put Rodale’s valuation in the $100 million-range, others put it at $200 million to $300 million. It believed that the media firm’s revenues are around $200 million, which marks a steep decline in recent years. For context, in 2015, The Wall Street Journal reported that Rodale’s sales were between $300 million and $350 million, which was down from more than $600 million in 2008.
Returning to the deal, it is believed that Hearst will likely consolidate or close some of Rodale’s smaller titles, and potentially shutter its Pennsylvania headquarters, which would be an economic blow to the town of Emmaus. Hearst did not immediately respond to inquiries regarding job cuts, consolidations or closures.
David Carey, president of Hearst Magazines, celebrated the deal, offering: “Maria Rodale has grown her family’s business into a peerless authority that reaches an enormous audience. Hearst and Rodale are already publishing partners around the world, including the U.K., the Netherlands and Japan, and we’ve seen first-hand how the content resonates. We are pleased to add them and all of Rodale’s brands to our vibrant and varied global portfolio, providing readers with dependable information and offering marketers unbeatable scale and a trustworthy environment in the increasingly important health and wellness space.”
Maria Rodale said: “We have a longstanding respect for Hearst’s commitment to connecting consumers with imaginative, engaging content across an ever-diversifying choice of platforms, technologies and experiences around the world. We believe our exceptional brands, businesses and employees will thrive in this culture of innovation and we are confident that Hearst’s stewardship will continue to grow the passionate and purpose-driven communities that Rodale has built over the past 70 years.”
Allen & Co. LLC acted as financial adviser to Rodale in its sale and Wachtell, Lipton, Rosen & Katz acted as legal adviser.