Brill Media Holdings and Powerful Media confirmed their merger Monday, a complex deal designed to lend Brill and partner Primedia a new brand, Inside.com, and a handful of new editors and reporters. Powerful Media gets some deeper pockets to weather a soft ad market and pursue the tricky business model of asking people to pay for content on the Internet.
Inside.com and Brill’s Content magazine could let go up to 50% of their staff to cut costs and avoid overlap. Layoffs started over the weekend.
No cash changed hands. Deal leaves Powerful Media backers Flatiron Partners, J.P. Morgan, Lehman Bros., James Cramer and Rho Management, which put up $35 million, with minority stakes in Brill Media. Brill partners include Steven Brill, Barry Diller, George Soros, Lester Pollack and Howard Milstein.
Powerful Media chairman Kurt Andersen and Inside.com editor-in-chief Michael Hirschorn, who co-founded the venture last year with CEO Deanna Brown, have inked two-year contracts and share the vice chairman title at Brill Media. Andersen will oversee the new partnership and work on a television project.
Hirschorn will add the moniker of editorial director of Inside Content, a magazine that will fuse Brill’s Content and Inside magazine. Content editor-in-chief David Kuhn was named editorial director of Inside.com.
Inside magazine editor-in-chief Richard Siklos has been offered the position of editor-at-large.
Brown will leave after three months to pursue other interests.
“We are very happy that our story has a next chapter,” Andersen said at a press conference in Gotham. When the stock market turned nasty and the ad market headed south late last year, Andersen said, it grew more clear that Powerful Media “would not get to profitability with the cash we had” left — about $10 million — and wanted to clinch a strategic alliance while it still had “options and alternatives.”
“I am very happy to let Steve drive the bus for a while,” Hirschorn added.
The Inside.com site will become a main home page for Media Central, a collection of 170 trade titles and conferences owned mostly by Primedia and managed by Brill. Inside.com content will be fed to other publications and sites, such as magazine trade book Folio. Their writers will appear on Inside. The site will continue to charge for access, with the hope that readership will be strengthened by Primedia’s subscription base.
Inside’s paid subs number in the thousands — a number far below Powerful Media’s initial projections. Despite Media Central’s plans to pursue a more aggressive subscription model, it remains unclear whether the current dicey economic climate will sustain another industry journal covering the media.
Inside magazine and Brill’s Content will cease publishing sometime this summer to work out a look and feel for the new Inside Content. The idea is to expand Content’s microscopic examination of the news media with Inside’s coverage of the broader entertainment biz. Hirschorn sees a kind of targeted Fortune magazine.
“I saw in Inside magazine a much stronger, clearer path to economic success,” Brill said.
Kuhn said that he, too, is “relieved” to be working with Andersen and Hirschorn to “rethink” the magazine.
“Is this a return of synergy or just an amassing of crippled assets?” wondered Inside.com’s own news story on the merger written by David Carr.
Contentville, the e-commerce venture of Brill Media, in partnership with such entities as CBS and NBC, is unaffected by the merger.