Advertisement

2 Potential Buyers Emerge in Bidding for Vibe, Spin and Blaze

Share via
SPECIAL TO THE TIMES

The magazine industry is abuzz about who will buy Vibe, Spin and Blaze now that Miller Publishing Group has put its prized music publications on the selling block.

Since the Los Angeles-based publishing company hired investment banker Salomon Smith Barney to explore a deal, a Chicago investment firm and the former president of Vibe/Spin Ventures have emerged as potential buyers of the hip, urban magazines.

Some say Miller Publishing Chairman Robert L. Miller faces pressure from his primary financial backer, Freeman Spogli & Co., a Los Angeles-based venture capital firm, to sell the high-profile magazines. Miller, who could not be reached for comment, plans to keep his sports and travel titles, including Tennis, Sailing World and Where.

Advertisement

Some industry insiders believe the former Time Inc. executive paid too hefty a price to build his mini-publishing empire. In 1996, he bought Time Inc.’s Vibe for $20 million. A year later, he scooped up Bob Guccione Jr.’s Spin for about $43 million. He also paid an estimated $40 million for the Where travel guides, and about the same sum for a collection of sports titles owned by New York Times Co.

In addition, Miller last year launched Blaze, a hard-core hip-hop title that has yet to find its niche.

Dan Capell, editor of Capell Circulation Report, believes Miller and his investors were motivated by the strong market for magazines. Through September, total magazine advertising revenue rose about 12% from the same period last year, according to the Publishers Information Bureau. Spin’s ad revenue was up about 23% to $31.4 million, while Vibe’s was up 19% to $37.5 million.

Advertisement

“It’s a good market to get top dollar for their investment,” Capell said. “And I wouldn’t be surprised if another financial firm buys them.”

Todd Halloran, a partner at Freeman Spogli, declined comment. The firm has invested $100 million in Miller Publishing.

Avy H. Stein, co-founder and managing partner of Chicago-based Willis Stein & Partners, would not comment on whether his firm would bid for Vibe/Spin Ventures. But he said the three publications would fit well with the company’s other media holdings.

Advertisement

“Spin and Vibe are fairly effective at reaching the 18-to-24 demographic, and we’re very focused on that market,” said Stein, adding that his company owns a magazine geared for college students and an agency that places ads in college newspapers. “This group has tremendous spendable income, and we’re looking for ways to expand into this market.”

Stein’s firm has been eager to reenter the magazine business after selling its shares of Petersen Cos. to EMAP, one of the largest consumer magazine chains in Europe. EMAP paid $1.5 billion for Los Angeles-based Petersen, which publishes more than 600 magazines, including Motor Trend and Teen.

Stein said his company sold Petersen because EMAP paid a high premium. “A lot of growth that we know would have been achieved was paid for upfront,” he said.

Keith Clinkscales, former president of Vibe/Spin Ventures who is forming a media company, also is interested in Vibe, Spin and Blaze. And with six former Vibe employees now working for him, Clinkscales has proven he understands the business. However, he is deemed a longshot when competing with deep-pocketed investment firms.

“I’m definitely interested in looking at it,” said Clinkscales, who left Vibe/Spin Ventures earlier this year after a six-year stint. “It’s an exciting asset and it has good brands. I loved my time at Vibe, and I worked with really good people.”

But there are questions as to whether Clinkscales can make a serious bid.

These days, magazines are seen as hot commodities among cash-flush investors because they have strong brands that can be parlayed to the Internet.

Advertisement

“Since Internet valuations are so sky-high, magazines are a bargain by comparison and give a platform for content for the Internet,” said Reed Phillips, a managing partner of DeSilva & Phillips, a New York investment firm that handles media deals.

Clinkscales agrees. “Magazines provide solid revenue and a promotional bridge to the Internet,” he said. “And everyone wants to get into the dot-com craze.”

Still, there also are concerns about management turmoil at Vibe, Spin and Blaze. Vibe’s editor, Danyel Smith, recently quit to join Time Inc. And earlier this year, the editors of Spin and Blaze were fired. Blaze’s Jesse Washington came under fire after he tried to hire Montoun Hart, an acquitted co-defendant in connection with the 1997 murder of Jonathan Levin, son of Time Warner Chairman Gerald Levin.

“Most magazine publishers are conservative businessmen who don’t want to buy a business with a stigma attached,” Phillips said. “They want a wholesome business.”

But John Rollins, co-president and group publisher of Vibe/Spin Ventures, doesn’t believe such troubles will affect the sale of the magazines.

“There’s not a company in the urban music industry that also doesn’t have its share of incidents,” he said. “It’s up to good business managers to steer through it, and that’s what we’ve been able to do.”

Advertisement

Asked about the sale, Rollins said: “Bob Miller has an investment firm behind him, and investment firms like to make tremendous profits.”

Advertisement