Another round of magazine selloffs may be close at hand
Further downsizing is looking inevitable at Primedia, as chairman-CEO Tom Rogers on Thursday was ousted from the Gotham-based magazine publisher. Rogers, whose dogged long-term vision of Internet-media synergies was increasingly out of step with frustrated investors and board members, will be replaced by current prexy Charles G. McCurdy, as the board conducts a search for a replacement.
Dean Nelson, CEO of Capstone Consulting, a consulting firm that has worked on budget-trimming with Primedia’s controlling shareholder, Kohlberg Kravis Roberts, will be the interim chairman.
With Rogers out, sources say Seventeen magazine is likely to be just the beginning of another round of magazine selloffs. Last year Primedia sold Chicago, Modern Bride and the American Baby Group in order to tackle its $2.3 billion debt.
‘Differences’ with board
On Thursday, after lengthy speculation as to when ex-NBC exec Rogers would be cut loose after a difficult 3½-year stint, he finally stepped down due to “differences” with the board of directors over the future of the company.
The decision was made as Rogers’ contract, which would have expired in the fall, was being negotiated.
“Tom and the board recognize we have real differences in the strategic direction of the company that surfaced in the contract renewal process,” KKR partner Henry Kravis said in a statement.
The writing had long been on the wall, and few people within the company, which owns mags ranging from consumer titles such as New York to trade mags like Soybean Digest, were surprised.
Rather, the question seemed to be: What took so long?
“He survived longer than a lot of folks expected,” said Steve Cohn, editor of the Media Industry Newsletter. “Henry Kravis had faith in him, but other shareholders put the pressure on Kravis.”
Ready to sell
Primedia now is expected to shed magazine titles more aggressively, sources say.
Rogers traditionally has resisted selling off the ailing media company’s properties, including Seventeen (final bids were made on the teen glossy Wednesday); he fired John Laughlin, prexy of Primedia’s consumer magazine division, in part because Laughlin advocated putting properties on the block.
Officially, the company says it’s maintaining the status quo. According to a note published by Merrill Lynch analyst Karl Choi, Rogers had more ambitious growth ideas for the company, “but the board (and KKR) would prefer Primedia to stick to its core operations.”
Primedia shares lost nearly 80% of their value during Rogers’ tenure. At one point in 2000, the shares traded as high as $34.88.
Similar to the way the synergy between AOL and Time Warner sputtered, Rogers’ attempts to bring a “sleepy little media company” into the online age were badly timed.
When Rogers joined in 1999 from NBC Cable, the dot-com bubble was close to bursting. The CNBC founder went on a spending spree, acquiring and investing in Internet businesses whose value soon plummeted, most notoriously About.com and Brill Media Ventures, which included money-losers Brill’s Content magazine and online business Contentville.
Rogers is not the first Primedia exec KKR has elbowed aside as it wrangles with financial loss. Rogers’ predecessor, William Reilly, and former Primedia prexy James Warner also were booted. All three notably lacked backgrounds in magazine publishing.
“You have to wonder if KKR is going to come to its senses and hire someone who knows something about magazines,” mused Chip Block, vice chairman of USAPubs.
Primedia shares rose almost 2% to close at $2.85 Thursday.