Back in 1997, the strategy no doubt seemed strong. A newly created entity called Miller Publishing Group—a partnership between Vibe, Time Warner veteran Robert Miller and buyout shop Freeman Spogli—acquired Spin magazine, Rolling Stone’s cooler, younger competition founded in 1985 by Bob Guiccione, Jr and covering the ever-widening world of modern rock.
The magazine seemed like a natural match for Vibe magazine, a design-conscious publication Quincy Jones founded in 1993 to focus on R&B, hip-hop and black culture. With one magazine focused on modern rock music and the other set on the burgeoning hip-hop and R&B world, the media company sounded like a solid, versatile media platform.
“Music is one of the most powerful influences on young adults today,” said Jones, founder and chairman of Vibe, in 1997. “The prospect of these two magazines forming a definitive home for young adults is very exciting.”
The Freeman Spogli-led partnership was recently dissolved when both magazines were sold off to different buyers.
Vibe was sold to New York-based The Wicks Group for an undisclosed sum. The private equity firm promptly reinstated former editor Danyel Smith and is embarking on a plan to grow the magazine’s brand.
But like any private equity deal, publications can be a risky proposition, as evidenced by the fate of Spin. In recent years, Spin, suffered from fewer advertising pages and a dip in ad revenue. It was sold at a fire-sale price “below $5 million” to California-based groups the McEvoy Group and Hartle Media, well below the $43 million it was purchased for in 1997.
Other music magazines have seen troubled times—and are attracting private money. In 2002, Black Enterprise Greenwich Street Corporate Growth Partners—a private equity firm headed up by Black Enterprise magazine CEO Earl “Butch” Graves Jr—made a $12-million investment in The Source, a long-running magazine covering hip-hop.
Even after the capital injection, the magazine has been involved in a tug-of-war for control, as ad pages and circulation decline. In October of last year, the magazine reportedly defaulted on an additional $18 million in financing from Providence, Rhode Island-based Textron Financial, and this January the board fired magazine founder David Mays and long-time president Ray “Benzino” Scott.
One could chalk these problems up to the troubles found in the music industry, which has seen record sales drop since 2000.
But it isn’t just music magazines. In 2004, Spin founder Guccione’s father’s adult entertainment magazine Penthouse was brought out of bankruptcy by Boca Raton, Florida-based private equity firm Marc Bell Capital Partners. Last year, it raised an additional $48 million in financing to expand its broadcast operations.
Able to be picked up a cut-rate prices and, in some cases, with recognizable brands that can be built into multi-faceted platforms, it is little wonder why private equity firms are interested in the publications. And as the media landscape encounters more and more changes, from dropping ad rates in magazines yearning to build the brand up beyond the magazine, these publications could increasingly finding themselves in the hands of private investors for good or ill.