Wenner Media has sealed a deal that will allow founder Jann Wenner to keep control of the company and refinance about $200 million in long-term debt.
But the banks are keeping a short leash on the free-spending mogul.
JPMorgan arranged the loan following what were termed “some investor-friendly revisions.”
The loan covenants limit the dividends that founder Wenner can take out of the company.
The financing was around $200 million, with a $15 million line of credit. Sources said it carries interest payments of about $23 million a year.
The loan will be used to refinance outstanding debt from Wenner’s 2006 deal to buy out Walt Disney’s share of their joint venture in Us Weekly. At the time, the red-hot celeb weekly was said to be worth up to $700 million and clearing profits of more than $80 million a year. Since then, the profitability of Us Weekly has been cut in half as newsstand sales tumbled.
In addition to Us Weekly, the company’s stable of magazines includes Rolling Stone, which is modestly profitable, and Men’s Journal, which is said to be losing money. Wenner Media declined to comment.
Celeb mags chill
Total magazine circulation was flat in the second half of 2012 despite digital sales gains, according to the latest figures from the Alliance of Audited Media.
Single-copy newsstand sales tumbled 8.2 percent overall for the six months ending Dec. 31 compared to the year-earlier period.
Mary Berner, the CEO of the Association of Magazine Media, said single-copy sales are a poor indicator of the industry’s health because they account for only 10 percent of the total magazine marketplace.
“Some titles are doing well, some aren’t, but overall there is growth in the consumer audience,” she said, citing MRI surveys, which showed magazine readership actually rose 1.6 percent last year. There were 7.9 million digital replica editions distributed in the period, accounting for 2.4 percent of all circulation.
That’s a tiny percentage of total circulation, suggesting that the iPad and other tablets have been at least mildly disappointing in terms of transforming the industry.
While they are not the cure-all that publishers had hoped for, the numbers are still trending in the right direction. Digital editions more than doubled from a year ago, when they totaled 3.2 million.
Single-copy sales are still a major driver in the celebrity category, where most of the magazines are reeling.
One publishing executive said the election slowed interest in celebrities, but Superstorm Sandy was the real culprit.
“Things were going along OK in the third quarter, and then Superstorm Sandy hit and that seemed to be the point when things fell off,” said Ian Scott, president of Bauer Media, which owns In Touch and Life & Style.
Both of the titles missed their rate base — the amount of circulation they promise advertisers that they will deliver each quarter.
He also said the election drew attention away from celebrities. “During the election build-up, people would rather read about that than Kim Kardashian.”
Still, there is no doubt that the celebrity magazines that were the shining star of growth until 2007 have been in a prolonged slump.
People, the top moneymaker at Time Inc., saw single-copy sales for the six-month period fall by 12 percent, to 971,668, down from 1,106,244. Its paid subscriptions rose 5.2 percent and its total circulation, including nearly 250,000 free copies known as “verified” circulation, rose 1.9 percent. But in a telling sign, the verified circulation was needed for the weekly to satisfy its rate base of 3,450,000 copies.
Wenner’s Us Weekly saw newsstand sales tumble 14.6 percent, to 528,027, while overall total circulation dipped 2.2 percent, to 1,964,446. Us also had to get a little help from its 82,000 free, or verified, copies to meet its rate base.
Star Magazine took an even bigger hit on newsstands, dropping 21 percent, to 345,565, from 437,199, while its total circulation dipped 4.9 percent, to 801,735. Its sister title, OK! Weekly, saw a 23.3 percent decline in single copy sales, to 191,341 while overall circulation fell 14.4 percent, to 506,080.
In Touch was off 14.8 percent on newsstands and 14.3 overall, to 569,074, which means it missed its rate base promise of 600,000.
Life & Style was similarly challenged on newsstands, falling 19.1 percent, to 306,352. Overall circ fell to 316,615, down 18.4 percent, and below its promised rate base of 350,000.
Not so Lucky
Lucky magazine became the second title in the Condé Nast empire to cut its frequency to 10 times a year, from 12. The magazine said it would run a double issue in the December/January period and in the June/July period. The news was first reported by Women’s Wear Daily.
Recently, W made the same cutback in frequency. It marks the first move by new general manager Gillian Gorman Round. She came on board three weeks ago and outlined a yet-to-be-revealed plan to transform the once-hot shopping magazine with a big digital component.