About 70 potential bidders got their first look at the 18 magazines that Time Warner is selling in its Time Inc. unit, and many industry observers feel the auction will be a bellwether for the entire publishing industry.
The group now on the block has advertising revenue of about $190 million, total revenue of just under $250 million and cash flow of about $20 million, according to sources who have seen the confidential books of financial data.
The magazines on the block include mostly male-oriented sports titles such as Field & Stream, Outdoor Life, Ski, Skiing and Transworld SnowboardIng – all titles that are part of the company’s Time4Media Group – as well as the Parenting Group, which includes Parenting and its spinoffs.
The largest share of the revenue comes from the Parenting Group, with revenue close to $90 million. Although all of the magazines have sturdy followings among their enthusiast audiences, for the most part, they have been stuck in slow growth or no growth in recent years.
At 10 times the $20 million earnings figure, it means a prospective buyer could potentially value the group at only $200 million.
But the company running the auction, J.P. Morgan, is hoping that bidders base the ticket price on projected future growth without the onerous burden of Time Warner’s corporate overhead.
They are hoping it fetches somewhere in the $300 million to $400 million range.
Regardless of how the auction proceeds, Time Inc., the nation’s largest magazine publisher, is expected to embark on another round of downsizing among its stable of magazines.
Most industry observers feel that the price tag will be driven largely by the interest that private equity financial players and a handful of overseas publishing buyers have in the magazines.
Time Warner, under pressure from Carl Icahn to improve and sell off properties, hopes a deal is finalized before year end. The first round bids are due at the end of October.
The bidding comes on the heels of a busted auction for Curtco Media, the publisher of luxury upscale titles such as the Robb Report, Worth, Show Boats International and Gulf Coast Life. Goldman Sachs, which was running the auction, had said it expected the company to fetch anywhere from $350 million to $500 million, based on projected future earnings.