Primedia to Purchase About
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Offline magazine publisher Primedia said it will buy About, Inc. in a $690 million all-stock deal, forming what the companies say will be one of the largest on- and offline media companies and touting its combined opportunities for marketers.
Primedia publishes more than 220 offline consumer and business magazines -- ranging from teen, parenting, and enthusiast publications to agricultural, industrial and technical trade journals. Its consumer titles include Seventeen, American Baby, and New York magazines. By some estimates, Primedia controls about half of the circulation in the trade publishing industry.
The company also runs Web sites associated with its publications, and business-to-business cable and video outlets, bringing the company's total media outlets to about 700. It reaches 200 million readers/users, has a sales staff of 1600, and says it has 60,000 advertisers.
About brings to the table its network of 700-plus topical interest Web sites, many of which coincide with Primedia publications. It boasts 4000 advertisers, and Jupiter Media Metrix rankings tab About.com as the seventh largest Web property, with 20.5 million unique visitors for September.
The new company, executives said, will leverage its offline and online properties to deliver targeted marketing opportunities. The deal will give About.com a substantial boost in its sales efforts -- as the two companies will be able to provide advertisers with cross-media marketing opportunities. For Primedia, the move gives it a jump start in the Internet area -- an important factor as the old-line media company looks to generate growth. About.com founder, chairman and chief executive officer Scott Kurnit will take the helm of Primedia's Internet business, as the company's chief internet officer.
"Primedia is the absolute leader in offline targeted content, and About is the absolute leader in online targeted content. This makes this combination utterly spectacular," said Kurnit said during a conference call with analysts. "The big money is in targeted marketing."
Rogers likened Monday's deal to a niche version of America Online's proposed merger with Time-Warner.
"While the AOL and Time-Warner merger announced earlier this year created a mass media powerhouse of new and traditional media, the Primedia and About merger creates the leading model for the integration of traditional and new media niche content and the resulting delivery of targeted marketing vehicles," said Mr. Rogers.
The deal is subject to shareholder and regulatory approval, and is expected to close during the first quarter of 2001. In this morning's trading, Primedia's stock dropped 21 percent to $11.93. About.com was up 3.6 percent, or $0.88, to $24.75.
In the meantime, however, About and Primedia inked an additional, immediate deal that includes an ads-for-equity swap valued at $72 million, aimed at promoting About's sites among Primedia's properties. Primedia's sales force will also rep certain, unspecified About sites as part of that deal.
"This merger really boils down to three things. First, scale across the niches. Second, leverage in monetizing these niches. Third, synergies yielding cost savings," Rogers said.
"Applying [Primedia's sales] force to About's niche-based sites, driving Primedia magazine subscriptions on these sites, and combining other such revenues with cost synergies which result from cutting back About's marketing expenses while significantly cutting back Primedia's own spending on Internet businesses yields a high-growth formula," he added.