Information Today, Inc. Corporate Site KMWorld CRM Media Streaming Media Faulkner Speech Technology Unisphere/DBTA
Other ITI Websites
American Library Directory Boardwalk Empire Database Trends and Applications DestinationCRM Faulkner Information Services Fulltext Sources Online InfoToday Europe KMWorld Literary Market Place Plexus Publishing Smart Customer Service Speech Technology Streaming Media Streaming Media Europe Streaming Media Producer Unisphere Research

News & Events > NewsBreaks
Back Index Forward
Threads bluesky LinkedIn FaceBook Instagram RSS Feed Acquired by Primedia: Sin or Synergy?
Posted On November 6, 2000 (, the seventh most-frequently visited site (according to market-intelligence company Jupiter Media Metrix), was acquired by traditional trade and general magazine publisher Primedia ( The speed of the acquisition surprised both industry followers and staff members at The same day the acquisition was announced, a Wall Street Journal article reported merger activities, giving their success only a 50-percent chance and calling the negotiations fragile and likely to fall apart. Within hours, the deal had gone through and press releases flew. Staff members heard about the move at the same time the world did. Some observers attributed the quickness to the personal relationship between Scott Kurnit, CEO, chairman, and founder of, and Thomas Rogers, the newly appointed chairman and CEO of Primedia. Kurnit and Rogers have worked together in the past and have been friends for many years.

The merger of a traditional publisher with a dot-com business marks another example of the blending of print and online in the Net economy. will gain marketing opportunities and sales channels through Primedia's print publications.  Primedia will be able to better satisfy the desire of advertisers for both print and online outlets, as well as promote subscription sales to consumers through was founded in February 1997 as the Mining Co. and was renamed in 1999. The Internet portal has 36 areas on its site covering 700 topics and 50,000 subjects. All of the areas have human "guides" who manage the content and community activities in their areas of expertise. According to Chris Sherman,'s Web Search guide (, of the several hundred Primedia print publications, a large number have almost a direct correlation to's topics. The Web site tallies about 60 million users each month.

Primedia publishes some 220 magazines, including popular consumer periodicals (e.g., Seventeen and New York), numerous trade publications (e.g., Fire Chief and Coal Age), and enthusiast magazines (e.g., Cat and HotBike). It also owns the Channel One school television network and IndustryClick, an Internet B2B content service. It owns and operates over 200 Web sites plus other Internet properties. Primedia's annual sales in 1999 were $1.7 billion; its losses were $120 million. Tim Andrews, formerly head of Factiva, a Dow Jones/Reuters company, now heads up IndustryClick. The majority of Primedia's stock belongs to Kohlberg Kravis Roberts & Co.

Primedia has announced its goal to dominate print and the Internet in its niche markets. It has made a number of deals recently with Internet and other media companies to improve its online position.

In announcing the acquisition, Rogers compared the move to the Time Warner/America Online merger and said: "The Primedia and About merger creates the leading model for the integration of traditional and new media niche content and the resulting delivery of targeted marketing vehicles….With this transaction, Primedia has been transformed. Niche is king, and in one fell swoop we are marrying Primedia's powerhouse of content in more than 700 media niches with About's more than 700 topic-specific Guide Sites and some 10,000 associated experts. Primedia is the leading traditional media company in the delivery of highly targeted niche print and video products to consumers. About is the leading online company in the delivery of niche content. This is the most synergistic combination either of these two companies could possibly enter into and creates a one-of-a-kind company that no two other companies could create."

Primedia paid $690 million in stock for Initial negative market reaction led to a one-quarter loss in Primedia shares from their previous stock market value. had no debt at the end of September and $133 million in cash. Its revenues in the latest quarter had risen by one-third over the previous quarter, and people at the company expected to see it make a profit by early next year.

According to Kurnit, "We believe that by being merged with Primedia, we will grow faster and farther over time than as a stand-alone company." Kurnit will become chief Internet officer and a board member in Primedia, reporting to Rogers. The company will be known as Primedia, with becoming an Internet product line.

Terms of the agreement will pay out 45.2 million Primedia shares to's stockholders, a ratio of approximately 2.3409 Primedia shares for each share.

According to Rogers, Primedia plans to take advantage of cross-marketing and shared content with the new merger. "By adding the cross-promotional power [to] of Primedia's 200 million user and reader base, the ability to accelerate consumer reach will be very significant," he said. "This merger really boils down to three things. First, scale across the niches. Second, leverage in monetizing these niches. Third, synergies yielding cost savings. Primedia has a 1,600 person sales force and 60,000 advertisers. Applying this force to About's niche-based sites, driving Primedia magazine subscriptions on these sites, and combining other such revenues with cost synergies which result from cutting back About's marketing expenses while significantly cutting back Primedia's own spending on Internet businesses yields a high growth formula….We are convinced that this transaction saves years of development time and cost, while being accretive within the first 12 months. It also further de-leverages the company and increases the float, which have been two key objectives. We have taken a very conservative approach to what the combined revenues of the two companies will be in 2001. Nonetheless, with the cost and revenue synergies we see attainable in the first 12 months, we estimate $47 million of incremental EBITDA [earnings before interest, taxes, depreciation, and amortization] beyond what each of the companies alone would achieve with a unique accelerating growth rate going forward, thereby making the deal accretive to Primedia."

An ads-for-equity deal valued at $72 million will use Primedia's properties to promote A sales agreement, effective immediately, will have Primedia's large sales forces selling advertising on certain sites. Currently, has a 100-person sales force, while Primedia has a 1,600-person sales team. The overall transaction is expected to close during the first quarter of next year.

Staff changes should be minimal, according to Rogers and Kurnit. will keep its office space in New York, where some 350 of its 500 current employees work.

Barbara Quint was senior editor of Online Searcher, co-editor of The Information Advisor’s Guide to Internet Research, and a columnist for Information Today.

Comments Add A Comment

              Back to top