The deal of the year was finally sealed yesterday, with Hearst paying about $919 million to take over all the international magazines in the Lagardére Group — except for the titles in France.
Ultimately, about 100 of the 550 people now toiling at Lagardére’s US subsidiary, Hachette Filipacchi Media, will be laid off, starting with about 25 who will be shown the door today. Another 75 are expected to exit around year-end, meaning the merger will cut about 18 percent of HFM’s workforce.
Steve Parr, who was the CEO of HFM and is now a Hearst consultant, is the highest-level casualty.
The fear early on was that the layoffs would cut deeper.
“This has been a long time coming; I think the general mood is one of relief,” said one HFM insider.
All of the chief editors are safe, but that doesn’t mean it is stress-free. Kevin Martinez, who was the publisher of Elle, serving under Elle’s chief brand officer, Robin Domeniconi, has survived but will be bumped down to associate publisher.
Kevin O’Malley, who was publisher of Esquire at Hearst, has been dispatched to be the senior vice-president, chief revenue officer and publisher of Elle. “I guess we’re going to find out by e-mail,” said the HFM insider, since the Elle news came several hours after Hearst CEO Frank Bennack and Hearst Magazines President David Carey sent around the e-mail to employees of both companies announcing the deal.
The top Hearst executives, who were in Paris for the contract signing yesterday, are expected to start meeting with the HFM staff over the next few days.
Domeniconi, who had executive stints at Time Inc. and Microsoft before joining HFM, is expected to survive in a yet-to-be-defined corporate role at Hearst.
The other two executives in the spotlight are the chief brand officer of Woman’s Day, Carlos Lamadrid, and Nick Matarazzo, president of the JumpStart Media group, which includes an auto Web site and the car buff titles Car and Driver and Road & Track.
Lamadrid, if he survives, is expected to be bumped down to publisher and chief revenue officer. Hearst said JumpStart will continue in its current format.
The deal had been bandied about for more than a year as fitful talks started and stopped. Given the size of the deal, the path from exclusive bidder in December to preliminary merger agreement to yesterday’s finalization of a deal — first reported yesterday on nypost.com — was surprisingly rapid, five months to the day.
One reason for the rapid deal is that Lagardére Chairman Arnaud Lagardére wanted out because he felt he could never reach critical mass worldwide to make it a viable business. He reportedly wants to expand the sports marketing and branding operations that he has in Europe into the US. With Ted Forstmann battling cancer, a run at Forstmann-owned IMG becomes even more likely.
Hearst catapults into the No. 2 mag media publisher in the world behind Time Inc. With 20 titles in its US fold, Hearst passes Condé Nast as the largest publisher of monthly magazines stateside.
Martha
News that Martha Stewart Living Omnimedia is in play also riveted the publishing world.
Martha Stewart, the chief creative officer, and Charles Koppelman, the principal executive officer and the de facto CEO, were both saying that they thought Martha Stewart was a $1 billion brand. But Wall Street was valuing the company at under $200 million, based on its market capitalization, even after last week’s big run-up on the news that the Blackstone Group was retained to explore potential partnerships and other strategic options.
The company was insisting it was not trying to sell itself outright, but only seeking a bigger platform for growth.
In terms of traditional publishing outlets, the prospects are rather limited.
Time Inc. started Martha Stewart Living magazine back in the 1990s, but she famously feuded with the brass at the time, who eventually agreed to let her buy herself out. Even though that Time Inc. regime has long since moved on, it is doubtful that the nation’s largest publisher would want her back.
Hearst has its hands full digesting its now-completed acquisition of Hachette and Lagardére.
Condé Nast, now on the rebound, might seem a po tential outlet, although S.I. Newhouse passed on the original pro posal years ago after allowing the prototype to be put together in- house.
When we caught up with Condé Nast CEO Charles Townsend at the ceremonies marking Condé’s historic lease at 1 World Trade Center, he didn’t sound hot for a deal: “I hadn’t thought about it, but you never say never, right?”
Stewart rejoins the board in the third quarter, after a five-year SEC-imposed ban on holding office in a public company ends. Some think she may yet end up as the chairman.
She was oddly silent on the question of her becoming chairman when Ink interviewed her and Koppelman on the phone last week. Koppelman, whose contract ends in 18 months, said, “What, are you trying to get rid of me,” before adding, “Anything is possible.”