Media Moves

Covering the sale of a business magazine

February 11, 2014

Posted by Liz Hester

Bidders have been circling Forbes as the iconic business brand put itself up for sale. The value is now in the name since the company has been losing money.

Bloomberg had this story about potential bidders by Stefania Bianchi, George Smith Alexander and Zijing Wu:

Forbes Media LLC is drawing interest from acquirers including China’s Fosun International Ltd. (656) and Singapore’s Spice Global Investments Pvt, with final offers for the magazine publisher due today, people with knowledge of the matter said.

Germany’s Axel Springer SE, which publishes the Russian edition of Forbes magazine, is also interested in the business, two people said, asking not to be named discussing private information. Forbes, which is working with Deutsche Bank AG on the sale, is seeking as much as $400 million, people with knowledge of the matter said in November.

The sale of Forbes, famous for tracking the wealth of billionaires across the globe, follows years of dwindling profits as the rise of digital media ate into advertising at the magazine. During the sale process, Forbes executives have emphasized the brand as a masthead for events and conferences as well as real-estate developments, a way of extending beyond its roots in traditional media, two people said.

“Forbes used to just be a magazine, now it’s a worldwide business brand,” Ken Doctor, a media analyst with Outsell Inc., said in an interview. “How many people in their twenties and thirties are in emerging business markets — Asia, Africa, Latin America? That’s my sense of the great growth potential of the Forbes brand.”

Spice Global, whose businesses range from finance to health care and entertainment, is currently seeking partners from the Middle East, the U.S. and Singapore as it prepares its bid for Forbes, said two of the people. The company will keep a majority stake in Forbes even if it bids with a partner and may offer the Forbes family the opportunity to buy back shares in the company, one of the people said.

William Boston had this story in the Wall Street Journal about a potential bid for Forbes:

European newspaper publisher Axel Springer SE is bidding for Forbes magazine and wants a foothold in the U.S. digital-publishing market, but Chief Executive Mathias Döpfner is hesitating at the price of online assets.

Springer needs acquisitions to continue expanding its digital business but rarely pays a premium, Mr. Döpfner said in an interview. He described Springer’s approach as buying new-economy assets for old-economy prices.

“We are disciplined when it comes to price,” said Mr. Döpfner, who declined to discuss Forbes. “We will definitely not go hunting trophies in the U.S. seeking prestige.” He listed three criteria for pursuing targets: “a reasonable price, if we can become a market leader and if it fits with our core competencies.”

The company’s digital overhaul has accelerated over the past two years. It has reoriented its business and made more than two dozen acquisitions, mostly of small online companies. Mr. Döpfner described his strategy as getting back to the roots of the newspaper business: hard-hitting online news, financed by digital subscriptions, online advertising and digital classifieds.

Springer’s revenue from digital media rose to €1.1 billion in 2012 from €24 million in 2006. Operating profit on digital businesses rose to €243 million from €1 million during the same period. Digital businesses account for nearly 60% of Springer’s operating profit today, up from just 4% in 2008.

Springer is vying with several bidders, including two from Asia to buy Forbes Media LLC, people familiar with the situation said. The deadline for final bids was Monday evening in New York. The Forbes family wants to retain a minority stake and management control, according to a document reviewed by The Wall Street Journal. The family is seeking as much as $400 million for the company, a person familiar with the talks said. Forbes declined to comment.

Springer’s bid could be a good one for the Forbes brand. The Journal reported that Dopfner was one of the first to put content behind a paywall:

Mr. Döpfner also started charging subscriptions for the digital versions of the Bild Zeitung and Die Welt, becoming the first major German publisher to put online versions of flagship publications behind paywalls. Bild is Germany’s largest online news portal, reaching around 14 million unique users daily. Within six months, the company had more than 152,000 paying subscribers to

Mr. Döpfner’s moves have sparked criticism that he was abandoning journalism and selling the company DNA. He calls the claims “an insult to every journalist.”

Mr. Döpfner said content once again will be king. “That’s why it is interesting now to invest in content businesses that are still undervalued.” He described last year’s purchase of the Washington Post by Inc. AMZN -0.06% CEO Jeff Bezos as a watershed event that drew the battle lines between the traditional publishing industry and technology companies such as Amazon, Google Inc. GOOG -0.38% and Apple Inc. AAPL +1.79%

“The question is whether traditional content companies will win the game because they have learned how to use technology or whether the technology companies win because they learn how to create content,” Mr. Döpfner said. “That is the great game today.”

Forbes has tried a lot of experiments with contributor content and other native advertising. None of it has helped boost revenue, and some would argue it’s diluted the brand. It will be interesting to see the price and how the rest of the industry values the name.

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