Tuesday, May 15, 2007

Magazine Publisher Is Selling Special-Interest Unit for $1.15 Billion

Magazine Publisher Is Selling Special-Interest Unit for $1.15 Billion

The publisher Primedia said yesterday that it would sell its Enthusiast Media division, which includes magazines like Motor Trend, Soap Opera Digest and Surfer, for about $1.2 billion in cash to Source Interlink Companies, which is controlled by the billionaire investor Ronald W. Burkle through his Yucaipa investment firm.

The unit, which Primedia said in February it would consider selling, includes more than 70 magazines and 90 Web sites. It leaves Primedia with its Consumer Source business, which publishes free consumer guides.

The move comes after Primedia agreed to sell its hunting and fishing magazines to the private equity firm InterMedia Partners for $170 million in cash in December.

Primedia expects $1.15 billion in net proceeds and will be debt-free after the sale.

Source Interlink, which is based in Bonita Springs, Fla., said it expected the all-cash deal to add to adjusted earnings per share excluding one-time costs.

Source Interlink manages retail checkout areas for more than 1,000 retail chains and makes in-store displays. It also manages the delivery of magazines and other entertainment products like DVDs to retailers and consumers.

The deal is expected to close in the third quarter. Source Interlink said Enthusiast Media would operate as a division and would be led by Steve Parr, who heads the group at Primedia.

Primedia said that certain stockholders affiliated with the private equity firm Kohlberg Kravis Roberts & Company who own 61 percent of its shares unanimously agreed to the deal.

Primedia shares rose 34 cents, to $2.83, while Source Interlink shares fell $1.01 cents, to $5.79.

The Consumer: Terms of Engagement

The Consumer: Terms of Engagement
by Paul Parton

Ah, the perils of a monthly column. As usual, the things that I'm reacting to in early March will seem like ancient history by the time you read this. But, at the risk of seeming redundant, I was struck by Procter & Gamble exec Jim Stengel's keynote speech at the 4A's media conference this spring.

In many ways, the speech was a fairly familiar call for advertisers, media companies and agencies to embrace the consumer more fully. (Specifically, he suggested that marketers and agencies enter into a relationship with the consumer, rather than focusing on selling and telling.)

But a couple of points stood out. First, I hadn't realized that "telling and selling" was a P&G mantra -which explains in many ways why that approach to marketing is so ingrained. What gave me more cause to think, though, was why it's taking creative and media agencies so long to wake up and smell the Folgers.

Why are the traditional approaches to marketing communications still so widespread? Why is there still so much telling and selling? Why is the media industry still driven by buying rather than planning? Why is there still so little focus on the consumer?

Granted, even the most lumbering large agencies (creative or media) will supplement their TV campaign presentation with a little online advertising these days. Hell, they might even present (or at least talk about) viral communication. But at the end of the day, those things are really just repurposed forms of traditional media. A Web banner is usually little more than an animated billboard. Viral recommendations from traditional agencies generally come down to putting commercials online.

These things, though, are examples of media neutrality - or of the idea that it doesn't matter whether you're on TV or on the Web, as long as you connect with the consumer. When agencies endorse this concept, it makes them seem more progressive than they actually are.

Unfortunately, the reality is that media neutrality is the first baby step toward engaging with people the way that people want to engage with brands. Media neutrality is really easy. Because essentially, media neutrality comes down to different forms of the same thing - advertising.

What is significantly more difficult - and yet significantly more important, too - is discipline neutrality.

Being discipline neutral means that you're just as likely to propose a direct marketing solution to a communications problem as you are to present an advertising solution, a search solution or a PR solution.

Discipline neutrality is more difficult to embrace than media neutrality because it demands a working understanding of the strengths and weaknesses of a variety of different communication strategies and the ability to execute them.

Discipline neutrality demands that everything starts with a granular understanding of the consumer how they live, what's important to them and how they engage with the category and the brand. The task, then, is to build a communications plan from that understanding with no preconceived ideas about the form that plan will take or the disciplines or channels that will be used.

Consider, for instance, an agency tasked with jump-starting the sales of a brand of canned soup. The conventional approach would involve creating a TV and print campaign that would, say, extol the benefits of soup as an aid to weight loss. The ads would run in daytime talk shows and women's lifestyle magazines.

The media-neutral approach would be to do the same thing but take it further by sponsoring a segment on "The Biggest Loser," seeding the campaign in weight-loss forums and encouraging bloggers to write about the soup.

The discipline-neutral approach would be to understand how people used the soup and what kind of relationship they had with the brand. It could turn out, for example, that the soup was generally consumed at lunchtime, but only by people with microwaves in their offices. In this case, the discipline-neutral approach could consist of designing a self-heating soup can and launching it with sampling programs at major commuting locations and in city delis.

That kind of approach is the only way brands will ever really be able to develop a relationship with consumers. It's the opposite of "telling and selling." It's understanding customers and finding ways to engage them in a relevant way with genuinely useful innovation. Who'd argue with that?

Paul Parton is the brand-planning partner at The Brooklyn Brothers, a creative collective.