Meredith Corp. has flipped another former Time Inc. property for the substantial sum of $150 million in cash.
The 70-year-old Fortune magazine and its related events assets have been bought by Chatchaval Jiaravanon, who owns the Thai conglomerate Charoen Pokphand Group, which has some media and telecom properties, but mainly works in food, agriculture and retail. Meredith was said by sources early on to be seeking around $200 million for the magazine so the sale price to Jiaravanon marks a pretty steep negotiation. (Meredith was also said early on to be seeking somewhere in the neighborhood of $200 million for each of the four former Time Inc. titles it was selling, Time, Fortune, Money and Sports Illustrated, but the company said at one point it was aiming for a combined sale price of around $500 million).
A Meredith spokesman disputed industry speculation and numerous reports that the group had been seeking $200 million for Fortune, dismissing the number as “crazy.” He added that $150 million actually paid is “tremendous” and represents a 15x multiple of the brand’s earnings before interest, tax, depreciation and amortization, a typical base to measure a company’s financial performance, which means the title is only bringing in $10 million in ebitda, right now. The spokesman also said Money is worth no more than $15 million as a brand, so anyone looking at that title, take note. One thing he didn’t dispute was the speculated price of Sports Illustrated and noted that Meredith is “extremely pleased” with the overall sales process so far. If everything is going as hoped, then expect to see Sports Illustrated sell for somewhere around the price of Fortune.
The Fortune sale is expected to close before the end of the year and it will be a personal holding of Jiaravanon. In a statement, Jiaravanon said he wants to make Fortune “the world’s leading business media brand.”
“The demand for high-quality business information is growing and with further committed investment in technology and brilliant journalism, we believe the outlook for further profitable growth is excellent both for the publication and the events business,” he added.
As for the print side of the business, it’s said to be profitable and expected to remain a part of Fortune’s future.
Meredith’s sale of Time magazine to Salesforce Billionaire Marc Benioff just closed, roughly a month after it was announced. Benioff and his wife Lynne cut a $190 million deal for the title and just reconfirmed Edward Felsenthal’s role as editor in chief, while making him chief executive of the title as well. So far, Meredith has earned back about $350 million by flipping many of the Time titles it bought less than a year ago for $2.8 billion, and it still has Money and Sports Illustrated to go. Deals for those titles are expected sooner than later, in line with Meredith’s original goal of having deals for all of the titles by this fall.
Fortune’s editor in chief Clifton Leaf is expected to stay on as well, and sources say that Fortune is also expected to start hiring again and to stay in its current office at 225 Liberty Street through a lease agreement with Meredith, which took over the address early this year, being Time Inc.’s former headquarters. Staff will eventually move, but not for a while.
Alan Murray, who has been editor of Fortune since 2014 and previously served as chief content officer of Time Inc., is becoming president and ceo of Fortune. He wrote on Twitter that he’s “delighted to have found a buyer for Fortune that shares our mission, our independence and will invest to make Fortune grow.”
Similar to the Benioffs’ purchase agreement for Time magazine, Meredith will continue to provide a number of publishing services for Fortune, as it goes to an owner with plenty of money, but no magazine publishing infrastructure. In a statement, Meredith said it will continue to provide corporate sales, marketing, subscription fulfillment paper purchasing and printing as part of a”multi-year agreement.”
John Zieser, Meredith’s chief development officer, referred to the arrangement as a “win win relationship.” More a win for Meredith, as it sells these individual titles for more than it paid and is set to continue pulling in millions in revenue through these production and sales deals.
Beyond that, Meredith is poised to pay for much of its Time Inc. acquisition through the sales. Figuring Sports Illustrated and Money go for somewhere in the realm of $200 million, give or take a few million dollars, cash from the sales will be around a third of what it spent to acquire Time’s assets. With its decision to keep former Time titles InStyle, People, Food + Wine, Travel + Leisure, Real Simple, and Entertainment Weekly, which Meredith sees as full of revenue potential, it essentially will have paid about $300 million for each, not taking into account whatever continuing revenue Meredith stands to gain by cutting publishing and operations deals, which will reduce the effective acquisition price even more. Meredith is also using the sale revenue to pay down its debt, which it wants to cut by $1 billion next year.
People alone is seen as one of the most valuable magazine’s in the country, with nearly 40 million combined print and digital readers a month, according to MPA-The Association of Magazine Media, exponentially more that any other Meredith title. Spending effectively $300 million on it, if not less, is some deal.
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