(
)
Wenner Media is trying to refinance nearly $200 million of debt the company has been carrying since it bought out Walt Disney Co.’s stake in a joint venture that owned Us Weekly in 2006.
Several sources said negotiations with the banks have not been going well. Last week, Standard & Poor’s added to owner Jann Wenner’s difficulties by slapping a “B” rating on the debt with a negative outlook, citing industry-wide pressures, especially in the market for celebrity tabloids such as Us Weekly.
Under the worst-case scenario, a failure to resolve the debt question next year could put Wenner Media, which also owns Rolling Stone and Men’s Journal, in play, although for the moment that seems a long shot.
The company must reduce its debt-to-cash-flow ratio by March 31 to avoid tripping bank covenants, although the bulk of the loan doesn’t come due until October of next year.
Wenner has knocked off a good chunk of the original $300 million loan but still has $194 million outstanding plus an undrawn $25 million line of credit.
“The negative outlook reflects our expectation that debt leverage will remain elevated over the coming year, as debt repayment and cost reductions may offset, in our view, ongoing weakening in business fundamentals,” S&P said in its report.
The ratings firm said it expected the entire company to have discretionary cash flow of just $15 million to $20 million in 2013.
Us Weekly, which once boasted north of $80 million in annual profit on revenues of more than $310 million, is now said to be earning less than half that amount, according to sources.
Rolling Stone, the title that launched the company, is said to have annual profits in the $5 million range.
Men’s Journal finished out the year down 1.5 percent in ad pages, and sources believe it is losing money.
One source said that the banks have been urging Wenner to cut costs, including the company dividend that helps fund his lavish lifestyle.
He owns a Lear jet and a vacation home in Sun Valley, Idaho, among other perks, and his “working vacations” are said to keep him away from the office for months.
Several times in recent years, Wenner has cut the dividend to retire debt.
In addition to the loan from Us Weekly, S&P also said Wenner Media has a $200 million term loan due in 2017.
A company spokesman acknowledged there is a sizable debt to retire next year, but insisted it will be no problem.
“The company’s refinancing process is going very smoothly, and we anticipate that it will be completed in a timely manner,” said the spokesman.
New digs
As of next year, Time Inc. won’t be the only publisher with its headquarters in the Time & Life Building.
Sandow Media, the publisher of New Beauty, Worth and Interior Design, is moving its corporate headquarters to 1251 Avenue of the Americas early next year.
CEO Adam Sandow said he is in the midst of building out a new 40,000-square-foot operation on the 17th floor of the Time & Life Building, part of “Publishers Row” in Midtown.
A Time Inc. spokeswoman confirmed that the 17th floor is indeed being leased to Sandow. It previously housed Fortune, before the business magazine was downsized and its offices were consolidated on another floor in the building.
“It’s a great neighborhood,” said Sandow, who currently has two offices in Manhattan on 26th Street.
He also purchased the licensing rights to Beverly Hills clothing retailer Fred Segal and is planning worldwide expansion of the brand under licensing deals.
He said Sandow Media recently moved into a new 30,000-square-foot facility in Boca Raton, Fla., which houses a subsidized Starbucks and a brand-new gym.
At the moment, that serves as the corporate headquarters, but that designation will shift to Manhattan once the new offices open.
“We’re going to build a very innovative space in the Time Inc. building,” he said.
The company, which also owns Material Connection, plans to offer a library where engineers and designers can inspect new building materials. It also plans an exhibit space as well as offices for three magazines.
Sandow Media is believed to have annual revenue close to $100 million. It has grown from only 10 employees at its inception as a single-magazine publisher in 2005 to more than 400 employees today.
Sandow said he has eschewed private-equity backers but uses boutique investment bank Veronis Suhler Stevenson as his lender.
“My goal is to double the size of the company in the next two years, and I don’t want private equity funding that growth,” he said.
Spoil ‘Sport’
The Sporting News, which has been in business for 126 years, is the latest to drop print and go all digital.
Publisher and President Jeff Price and Editor-in-Chief Garry Howard broke the news to readers on the website yesterday.
“After 126 years of printing ink on paper with weekly, biweeekly or monthly frequency, Sporting News will official become a digital brand as of Jan. 1, 2013,” according to the announcement.
Along with a website, the title will continue to exist as a free, ad-supported iPad app that updates twice a day. The publication is part of the Newhouse family-owned American City Business Journals.
“Having spoken with many of our longtime subscribers, we recognize this is not a popular decision among our most loyal fans,” they said.
“Unfortunately, neither our subscriber base nor the current advertising market for print would allow us to operate a profitable print business going forward.”
The publication will offer subscribers a choice: Take a refund or apply their remaining print subscription to six special editions each year that will cover professional baseball and football, and college basketball and football, plus fantasy football and fantasy baseball special issues. These specials will sell for $7.99 each on newsstands.
The last time the Sporting News appeared in the Audit Bureau of Circulations report was December 2011, when it had 374,000 paid subscribers.
To prepare for the move to digital, the Sporting News stopped accepting subscribers a year ago. Howard said more than 350,000 people had downloaded its free iPad app as of yesterday.
Adieu, Maria
Long after computers were introduced at BusinessWeek, a quaint practice continued: Prior to publication, articles were printed and a team of researchers would put a red dot above a name or number to indicate it was correct. A missing red dot was a red flag that something was amiss.
For many years, the linchpin of this operation was Maria Chapin.
Few of the reporters and editors whom Chapin saved from embarrassment over the years knew of her life away from the magazine. Chapin was an accomplished painter who was Scholar of the Year when she graduated from the Rhode Island School of Design, had studied painting in Florence and had held a number of one-woman shows at prestigious galleries around town.
On Dec. 9, Chapin, the sister of former BW Managing Editor Ciro Scotti (now at Reuters) and the aunt of Fox Business reporter Christina Scotti, died suddenly at age 70.
The doyenne of “red dotting” is gone, but she is not forgotten.