Publisher pays $182 million in cash for properties
The Hearst Corp. has doubled up in the teen magazine market with the purchase of Seventeen from Primedia. Deal, which will complement Hearst’s successful CosmoGirl mag, was announced Thursday after a months-long auction that ended with Hearst outbidding Hachette Filipacchi Media USA.
Hearst paid $182 million in cash for the girly glossy, less than the $200 million-plus Primedia had hoped for. The proceeds will go toward shaving Primedia’s $1.7 billion debt, and are indicative of expected magazine sales in the future as the media company pares down under pressure from Kohlberg Kravis Roberts, Primedia’s primary shareholder.
One industryite called the payout a “fairly rich price,” considering that Seventeen’s operating profits last year were $15 million — one-twelfth of $182 million.
Hearst also acquired a number of Seventeen and teen-related brand initiatives in the transaction — including Teen magazine, which Primedia shuttered last year soon after it had acquired it and other mags from Britain’s Emap for $515 million.
“For Hearst it is a strategic investment because of its scale and potential alongside our other U.S. and international magazine businesses,” read a statement from Hearst.
Although Seventeen has long been the leader in the teen market with a circulation of 2.4 million, lately the magazine has been struggling, in part due to an onslaught of magazines like CosmoGirl, Time Inc.’s Teen People, Hachette Filipacchi’s Elle Girl and Gruner & Jahr USA’s YM. Earlier this year Conde Nast joined the lot with Teen Vogue. And Disney Publishing Worldwide is set to launch an American edition of W.i.t.c.h. magazine, which is also aimed at young girls.
Operating profits at Seventeen were down to $15 million last year from $25 million in 2000. Newsstand sales were off by 24% in the last half of 2002 compared with the same period in 2001. And a number of editorial hires have taken place over the past several months, as the magazine has tried to freshen its image, which many call dated and not as “sassy” as its competitors. In a move that now proves ironic, last November CosmoGirl’s executive editor Sabrina Weill jumped from Hearst to helm Seventeen.
According to Hearst, Seventeen’s staff will transfer in the acquisition, bringing Weill back to Hearst.
“I don’t know if they’ll be welcoming her with open arms,” one source said.
A single owner having multiple magazines in one category has had mixed results historically, depending on whether readers and advertisers have been able to mark a notable distinction between titles. While Hachette’s Road and Track and Car and Driver has been a successful pairing, others have been less so, such as Time Inc.’s Ski and Skiing magazines and Outdoor Life and Field and Stream.
Ownership of Seventeen will allow Hearst to offer advertisers perks like package deals for ads in its teen magazines, which together have a circulation of almost 4 million. But the challenge will be how to increase readers at both Seventeen and CosmoGirl without allowing one to elbow out the other.
“It’s up to Hearst to make sure there’s a real discernible difference between Seventeen and CosmoGirl,” said Chip Block, vice chairman USAPubs Inc.
However, the first step will be sprucing up Seventeen. “They need to put some life into it and make it more like a 2003 magazine than one from 1980,” said Samir “Mr. Magazine” Husni, a professor of journalism at the University of Mississippi.
Block warned, though, that too much sprucing could both alienate buyers who have come to expect Seventeen’s more staid fare, as well as push the magazine into CosmoGirl turf.
‘Fine line’ of changes
“They have to walk a very fine line,” Block said. “There’s some edginess that’s required, but it’s a trade-off.”
Under prexy Cathleen Black, who took over in 1995, Hearst has been praised for prudent belt-tightening, such as shuttering Tina Brown’s Talk last year.
Thus some were surprised by the splurge on Seventeen.
“Hearst is not a big buyer of magazines,” said Steve Cohn, editor in chief of the Media Industry Newsletter. “They bought Veranda last year, but that was their first purchase since Esquire in 1986.
“They’re very careful and strategic,” he said. “They’re not ones to do this every day.”