Lights out:
Primedia Completes Purchase of Aboutcom for $426 Mln
New York, March 1 (Bloomberg) -- Primedia Inc., the publisher of more than 200 magazines including Seventeen and New York, completed its purchase of About.com Inc. for about $426 million in stock, adding a larger online audience for its magazine content.
Primedia reaffirmed its forecast that earnings before interest, taxes, depreciation and amortization will grow 30 percent this year and 40 percent in the 12 months after it completes the purchase of About.com, which runs a group of information guides on the Web.
Primedia's narrowly focused magazines, such as Horse & Rider and Super Chevy, may be better able than other media to sell ads in a slowing U.S. economy, investors said. Buying About.com will let Primedia sell packages of magazine and Internet ads that target readers with specific interests.
``That part of the advertising market is going to get stronger, not smaller,'' said Samuel Shapiro, president of Shapiro Capital Management Co. in Atlanta. ``If I have `X' dollars to spend on advertising, I'm going to want more bang for my buck.'' Shapiro said he owns 3.4 million Primedia shares after adding to his holdings yesterday.
700 Internet Guides
About.com's 700 Internet guides cover topics ranging from pregnancy to automobiles, complementing Primedia's magazines like American Baby and Automobile. Primedia, which publishes 220 magazines, generated $1.69 billion in sales last year.
Primedia shares today rose 48 cents to $9.98 in New York Stock Exchange trading. The shares lost half their value over the past year as many media companies, including Walt Disney Co. and News Corp., said they expected slowing ad sales to reduce profit growth.
Primedia Chief Executive Tom Rogers said in an interview that he expects ad sales to grow 10 percent to 20 percent in the first quarter in some magazine categories and that he doesn't plan to cut jobs.
``We are finding the core of our revenue base is actually holding up quite nicely,'' he said.
New York-based Primedia also said it expects to cut $30 million in expenses this year at its Internet operations as it adopts About.com's technology to run Web sites that it already owned.
Primedia said in October that it would exchange 2.3409 shares for each About.com share. Based on yesterday's close, that values About.com at $22.24 a share, 38 percent less than the $690 million the transaction was valued at in October.
Mar/01/2001 16:16 ET |
