e5 Global Media buys The Hollywood Reporter
Nielsen sells eight titles; deal to close Dec. 31Letter from THR's editor and publisher
e5 Global Media, a new company formed jointly by private equity partner Pluribus Capital Management and financial services firm Guggenheim Partners, is acquiring The Hollywood Reporter and seven of its sister publications from the Nielsen Co.
Management of the acquired brands and their staff members will begin to transition immediately. The acquisition, which is subject to normal terms and conditions, is scheduled to close by Dec. 31.
In addition to The Hollywood Reporter, the brands included in the sale by Nielsen Business Media are: Billboard, Adweek, Brandweek, Mediaweek, Back Stage, Film Journal and the Clio Awards. e5 Global Media will also acquire the Film Expo business, which includes the ShoWest, ShowEast, Cinema Expo Intl. and CineAsia trade shows.
Pluribus was founded earlier this year by James Finkelstein, George Green and Matthew Doull to focus on acquiring and managing media properties with growth potential, particularly those with strong brand recognition across multiple platforms. Guggenheim Partners has more than $100 billion in assets under supervision.
Finkelstein will become chairman of e5 Global Media, and his two colleagues at Pluribus, Green and Doull, will also play key roles in the new venture. A CEO for the publishing group will be hired by February at the latest.
In remarks to staff at the different publications Thursday, Finkelstein put the accent on growth and expansion, especially regarding the core editorial products of the group.
"We're buying this business to expand every area of the company, with substantial increases in editorial -- the soul of what we're doing," he told Los Angeles staff via phone. Finkelstein, Green and Doull will fly to Los Angeles over the weekend to meet with West Coast staff early next week.
All three principals in the buyout have what Finkelstein referred to as "deep media experience."
In addition to the D.C.-based political trade paper "The Hill" and Who's Who directories, Finkelstein, who controls News Communications along with his father, Jerry Finkelstein, has owned and sold a series of business trades and local papers over the years, including National Law Publishing Co. to Wasserstein Perella in the late '90s. Guggenheim Partners, which employs 800 staffers, is based in Chicago and New York with 20 other offices in cities around the globe.
Green spent two decades at the helm of Hearst's foreign operations and in that span expanded the magazine's editions from 28 to 200, with many new licensing partners. Before joining Hearst, Green was president of the New Yorker before it was sold to Conde Nast in 1985.
Doull, who started his career as a financial reporter and was the associate publisher of Wired in the mid-1990s, has spent the past few years at financial institutions and in asset management.
Green told the assembled that as a longtime magazine publisher he perceives that THR and the other publications have "quite high" potential. "We intend to bring a new culture and a new energy to the business," he said, adding that from his perspective "editorial comes first, the business comes second."
Finkelstein and Todd Boehly, the managing partner in the Office of the CEO at Guggenheim Partners, described the acquisition in a statement as "a premier collection of media properties."
These are, they continued, "unique brands that are already leaders in their respective fields and, with the additional financial and strategic resources that we will provide, they will be positioned to add enhanced content across their print, online and new-media channels and to continue to deliver value to their subscribers and advertisers."
As for their views on the pros and cons of the hot-button issue of paid content for the Web, the new owners said they'd be evaluating different models for each of the publications.
They also said they had signed a long-term licensing agreement with Nielsen that would ensure continued access to the troves of measurement data pertinent to the media publications.
No financial details were made available related to the overall acquisition, though outside media reports have pegged the price tag at about $70 million. However, the partners are buying at a time when media dealmaking activity and values paid for media properties are at their lowest levels in years.
"What is fantastic about this deal is that THR will enjoy the combined talents of these extraordinary, publishing-focused executives at e5 Global Media and the resources they dispose of, but also that we will conserve a strong relationship with our outgoing parent, the Nielsen Co.," said THR publisher Eric Mika. "I couldn't be more pleased about the future prospects for the THR brand."
Gerry Byrne, now senior vp of Media & Entertainment at Nielsen Business Media (which oversees the brands that have been sold), will become a consultant to the new company beginning Jan. 1, the buyers said.
As for Nielsen, it remains committed to its other leading trade shows and affiliated brands. The company will continue to assess "the strategic fit" of other publications.
"Nielsen is committed to managing its portfolio of businesses in a way that maximizes their long-term value," said Greg Farrar, president of Nielsen Business Media. "Divesting these titles allows Nielsen to focus its investment on its core businesses and those parts of our portfolio that have the greatest potential for growth, including our leading trade show group."
In a statement from Farrar on Thursday, he said the company had made the decision to cease operations for two other pubs in the media group: Editor & Publisher and Kirkus Reviews. The former has been around since 1884, and the two jointly have 18 employees. (The Pluribus group did not consider those two properties.)
As for THR, it is the oldest daily entertainment trade publication in the U.S., having debuted on Sept. 3, 1930.
At the conclusion of the transaction for THR & Co., the group's U.S.-based publications will continue to be located in their current locations at 770 Broadway in New York for three years and at 5055 Wilshire Blvd. in Los Angeles for one year.
Sales talks began in September with the Nielsen Co. and included initially at least two other groups that expressed interest in the NBM properties. Word of a possible disposal surfaced a month ago, though Nielsen management did not publicly address the issue; the deal officially closed earlier this week and was unveiled Thursday morning.
The deal comes after almost four years of ownership of THR and other pubs by a consortium of six private equity firms including Blackstone and Carlyle, which bought all the Nielsen assets from Holland's VNU and which, it has been conjectured, could prepare Nielsen for an initial public offering. The Nielsen Co. makes most of its money from audience measurement and retail information and is currently involved in boosting its monitoring of Internet usage among consumers.
Revenue at the entire NBM unit, including the publications, Web sites and trade shows, fell to $260 million in the first nine months of 2009 from $370 million the previous year; in the third quarter of this year the unit clocked $15 million in operating income because of, among other things, cost-cutting.
Thursday's deal was brokered by John Wickersham of merchant bank Quayle Munro, who was a past president and CEO of the Business Media Group of Nielsen predecessor VNU. Boston law firm Choate Hall & Stewart advised Pluribus in the transaction.
Read a letter from THR publisher Eric Mika and THR editor Elizabeth Guider on the next page.
A new day is dawning at The Hollywood Reporter, one that we embrace. Since we joined THR as publisher and editor, our vision has remained supported by Nielsen and now will be strengthened by our new owners.
While tackling head-on the challenges of the economy and the rapid changes in the publishing and media businesses, we remained committed to the interests and needs of our readers and advertisers by providing differentiated and highly targeted content on all of THR's platforms -- from our daily Los Angeles and New York editions to THR's Friday international issue to the vast array of digital products and platforms we've launched.
We have benefited from the corporate rigor and the wealth of talent within Nielsen, and we will continue to have the best of Nielsen's support while welcoming new owners who are experienced in and dedicated to the business of publishing and to the values of THR.
We are proud of our organization and the staff of professionals who weathered the changes during this demanding time and yet managed to enhance a global brand of significant value that attracted new investors. THR has continued to invest in a 24-hour newsroom, in innovative digital products and partnerships, in franchise events such as the Key Art Awards and Women in Entertainment and in expansion into the fast-growing Asian markets. We have increased our total circulation 70% over our nearest competitor.
While proud of these accomplishments, we are excited and determined to see THR go to the next level: To that end, and with the guidance of our new backers Pluribus Capital Management and Guggenheim Partners, we will invest in people to boost our newsroom and features department. As the industry evolves, we intend to expand our news coverage to areas of interest beyond the fields of film and television, we will further refine our different approaches to our print and Web offerings, and we will build on our franchise events to better serve our local and global community of readers and advertisers.
There is no doubt that the next few months will be exhilarating and challenging, but we're confident that THR is ideally positioned to take advantage of the processes that we have put in place. We envision this new phase as an acceleration of good things we've been seeing on the horizon and as an opportunity to better serve the entertainment and media business. In short, we are ready for the day.
-- Eric Mika and Elizabeth Guider