EXHIBIT 99.1
PRIMEDIA To Acquire EMAP USA
*PRIMEDIA to become second largest consumer
magazine publisher in the U.S.
*Uniquely synergistic transaction will strengthen
PRIMEDIA's position as
the leading targeted media company in the world
*Transaction of $515 million is significantly
accretive to
per share value on an EBITDA basis
*Cash from selected divestitures and common
equity to fund acquisition will put
debt leverage ratios below current levels
New York, NY, July 2, 2001 - PRIMEDIA Inc. (NYSE: PRM) today announced it has
agreed to acquire EMAP USA (formerly known as Peterson Publishing) from EMAP
plc, forming the second largest magazine company in the U.S. EMAP USA has more
than 60 consumer titles reaching over 75 million enthusiasts through a
combination of magazines, network and cable television shows, web sites, and
live consumer events. The acquisition, upon completion, is immediately
accretive to per share value on an EBITDA basis.
Among its well-known titles are Motor Trend, Hot Rod, Teen, Surfer and
Stereophile. The properties uniquely complement many existing PRIMEDIA
products in key niche markets including automotive, teen, outdoor, active
sports and consumer electronics. This transaction significantly strengthens
PRIMEDIA in scope and scale in its core traditional media properties, and
enhances the company's position as the largest targeted media company in the
world with more than 280 consumer and business to business magazines, in
addition to its video and Internet properties.
Under the terms of the agreement, PRIMEDIA will pay $515 million for EMAP USA,
consisting of $505 million in cash and warrants to purchase 2 million shares
of Primedia at $9 per share that have been valued by Merrill Lynch at
approximately $10 million. The transaction, which is subject to customary
closing conditions including regulatory review, is expected to close by the
end of the third quarter. The acquisition does not include the U.S. edition of
FHM.
The financing of the transaction will improve PRIMEDIA's debt leverage ratios.
The acquisition is being financed through approximately half debt and half
from the combination of proceeds from the sale of non-core assets and the
issuance of common equity. The source of the debt will be the company's
existing revolving credit facility. The equity will be in the form of common
stock as well as an equity bridge. The common stock offering will be
backstopped by funds managed by KKR, PRIMEDIA's largest shareholder. The
equity bridge will be provided by KKR. The proceeds from non-core asset sales,
expected to be in excess of $250 million, will be used to repay the equity
bridge as well as debt. Those non-core assets to be sold will be disclosed at
a later date. As a result, the transaction will improve PRIMEDIA's capital
structure and leverage ratios.
Tom Rogers, Chairman & CEO of PRIMEDIA, stated: "While the word synergy is
often overused, this could not be a more synergistic transaction for PRIMEDIA.
Beyond providing great scale in catapulting PRIMEDIA to the number two spot in
the magazine industry in revenues and single copy sales, it further cements
our position as the number one producer of magazine editorial and advertising
pages each month. Moreover, the EMAP USA magazine properties strengthen
PRIMEDIA's unique mix of category specific endemic advertising (with its far
more stable characteristics than general brand advertising), as well as
circulation revenue which is an increasingly important component of the
Company's financial model."
In addition, the acquisition of the EMAP USA titles provides the following
important benefits:
- - Adds significant scale to one of PRIMEDIA's strongest niche sectors - the
automotive enthusiast market.
- - The new car automotive advertising category is enormous. The newly acquired
Motor Trend magazine when combined with PRIMEDIA's existing Automobile title
provides a uniquely strengthened position for the Company in this very
significant market.
- - The teen market is another highly significant focus for PRIMEDIA. The
acquisition of Teen Magazine, when combined with Seventeen, our Youth
Entertainment titles, Channel One, Cover Concepts, and our Internet teen
properties, including Gurl.Com, provides a strengthened presence for our
network of teen franchises.
- - The acquisition further cements PRIMEDIA's position as the leading provider
of niche topic video in the U.S. Already PRIMEDIA titles have been translated
to 10 weekly cable TV programs, and with the new properties, 5 more weekly
cable TV programs will be added emanating from the PRIMEDIA print brands.
- - EMAP USA's high tech and action sports titles add higher growth categories
to PRIMEDIA's enthusiast magazine business. In the action sports area,
PRIMEDIA acquires the Gravity Games, a leading TV franchise presenting youth
action sports, which is broadcast on NBC. The Action Sports properties also
add substantial reach in young male demographics.
- - This acquisition enables us to further amortize our About.com Internet
infrastructure, which is now being integrated into the operations of the
entire company. We can now pursue a wide array of high growth digital
opportunities without increased cost. It has become abundantly clear that the
enthusiast magazine brands provide a very solid basis for the creation of
multimedia platforms that span print, video and the Internet, and PRIMEDIA is
in a unique position to exploit these opportunities further as a result of its
new About.com and Consumer Video units.
- - The acquisition provides a unique opportunity for PRIMEDIA to leverage its
overhead that being substantial efficiencies as a result of the new scale of
operations. In the areas of paper purchasing, circulation, production,
technology, finance, and others, there are substantial cost savings that will
be achieved.
- - EMAP USA has developed significant sources of revenue in the area of
national branded sales, which will bolster PRIMEDIA's developing integrated
sales efforts. EMAP USA has also developed non-advertising revenues beyond
subscription fees, in the areas of licensing, merchandising, and events.
- - Direct marketing initiatives both offline and online, will be enhanced by
the significant increase in data base information that results from the
acquisition.
- - We will take advantage of our strong management team under the leadership of
John Loughlin, President and CEO, Consumer Magazine and Media Group, which has
already driven substantial improvements in the operations of PRIMEDIA's
existing consumer magazines.
Financial Information and Guidance
For the fiscal year ended March 31, 2001, EMAP USA (excluding FHM) had
revenues of $362 million and EBITDA of $54 million. For calendar year 2001, we
expect EMAP USA EBITDA to decline to approximately $46 million. With cost
synergies and revenue growth, we expect this EBITDA to increase to $62
million, or 35%, in 2002. Consequently, the price is 8.3X projected EBITDA.
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As we have said, the company expects EMAP USA to be a strong contributor to
EBITDA. At the same time, the Company continues to see the effects of a
sluggish advertising environment, especially in the B2B sector and the network
television market in which Channel One competes. At this time we expect
PRIMEDIA's full year 2001 EBITDA from continuing operations will be in a range
of $280 - $300 million which is consistent with Wall Street consensus
estimates. This will include the effect of this acquisition assuming a closing
by September 30, 2001, but will be offset by certain divestitures which should
occur during the same period. Further guidance on 2002 expectations, including
the effects of EMAP USA and asset sales, will be provided at a later date.
PRIMEDIA was advised by Merrill Lynch on this transaction.
Conference Call
PRIMEDIA will host a conference call today -- Monday, July 2, 2001 at 10:00
AM, ET, to discuss Primedia's acquisition of EMAP USA.
Via Phone
In order to participate in the call, please dial 1 (800) 235-0452 if you are
in the U.S., or 1(785) 832-1077 if you are outside the U.S. You should dial in
at least five minutes prior to the start of the call. The conference call ID
is Primedia.
A recorded version will also be available after the conference by calling 1
(800) 938-0996 in the U.S., or 1 (402) 220-1540 if you are outside the U.S. No
password is required for replays. The recorded version will be available two
hours after the completion of the call until 7:00 p.m. ET, Monday, July 9,
2001.
Via Internet
Access to the live and reply audio version of the Primedia conference call
will be available on our website at www.primedia.com (you will not be able to
ask questions via website).
About PRIMEDIA
PRIMEDIA is the new tradition in media. With 2000 sales of $1.7 billion from a
unique combination of traditional and new media properties, it is the leading
targeted content and integrated marketing solution in both the consumer and
business-to-business sectors. The Company is the #1 special interest magazine
publisher in the U.S., with more than 230 titles such as Seventeen, New York,
Fly Fisherman, American Baby, Telephony, American Demographics, the #1
producer and distributor of specialty video with 18 satellite and digital
video product lines, including, Chanel One Network; and the #1 news and
information group on the Internet, with over 1,000 special interest web sites
led by About.com. PRIMEDIA's stock symbol is: NYSE: PRM. More information
about the Company can be found at www.PRIMEDIA.com.
This release contains certain forward-looking statements concerning PRIMEDIA's
operations, economic performance and financial condition. These statements are
based upon a number of assumptions and estimates, which are inherently subject
to uncertainties and contingencies, many of which are beyond the control of
the Company, and reflect future business decisions, which are subject to
change. Some of these assumptions may not materialize, and unanticipated events
will occur which can affect the Company's results.
CONTACTS
PRIEDIA
Investor Relations:
Warren Bimblick 212-745-0615
Media:
Whit Clay 212-446-1864
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