The two quilts hanging on the walls inside
The mid-market private equity firm co-founded
Though a quilting magazine sounds like a unique investment for a private equity firm, Vikrant Raina, managing director at Boston Ventures, says that the sector fits with the firm’s overall objective to focus on media, information and publishing, entertainment and communications.
“Hobbyist magazines are a great segment of the publication and information business to be in,” says Raina. “The readers are very passionate, and they believe in whatever the hobby or craft is. It makes for the sales to be quite stable.”
Boston Ventures formed Cincinnati-based New Track Media in January 2006. Since then, under the direction of CEO Stephen Kent, the company has acquired two astronomy publications, a quilting magazine and a woodworking magazine.
Neither Raina nor Kent would disclose the firm’s investment, but Kent characterized it as “substantial.”
Some partners at Boston Ventures were familiar with Kent and his publishing expertise, says Raina, making the decision to fund New Track an easy one. Kent was previously president and CEO of F&W Publications, which Providence Equity Partner sold to ABRY Partners in 2005 for $500 million.
“You’ll never see us in an industry that is a fad,” Kent says. “We want something that has legs and is strong in terms of the number engaged in the craft.”
Kent calls quilting “the most exciting” of the hobby crafts “because it is the one portfolio piece where we enjoy the highest rate of growth, and it’s getting the most attention.”
Indeed, quilting is considered one of the fastest growing segments of the craft industry. The 9.4 million quilting households nationwide spent an average of $148 on quilting products last year—the highest annual dollar amount of all craft pursuits. And quilting is garnering much media attention recently, thanks in part to the American Quilter’s Society and its museum, in Paducah, Ky., where 35,000 quilters worldwide flock annually to a quilting convention.
This isn’t Boston Venture’s first foray into special interest publishing. Raina says the firm sold its interest in World Publications, a Winter Park, Fla.-based consumer interest set of magazines, to The Bonnier Group, of Stockholm, Sweden, in 2006. Boston Ventures had invested in World Publications in November 2001 and sold it in October 2006.
“We had just exited a very successful investment in World Publications a couple of years ago with [CEO and owner] Terry Snow,” says Raina. “Then this opportunity turned up to partner with Steve [Kent]. He obviously had been involved in specialty publishing for a very long time.”
Boston Ventures is far from the only firm involved in such hobbyists magazines. Frontenac Co. of Chicago, and New York-based Catalyst Investors and Sandler Capital Management have each invested in companies that have purchased or launched publications targeted to crafters and hobbyists, including woodworkers, astronomers, needleworkers, leathermakers and visual artists.
“The majority of the revenue in our business comes from subscriptions,” says Walter Florence, a managing director at Frontenac. “We have a loyal, invested audience that has intensive information needs. Regardless of the channel in which they’re consuming this media, they’re willing to pay for this information.”
Together with minority partner Catalyst Investors, Frontenac is an investor in Aspire Media, a holding company similar to New Track. Loveland, Colo.-based Aspire publishes nearly 20 magazines geared toward hobbyists and crafters. Ryan McNally, Catalyst general partner, declined to disclose how much the firm has committed to Aspire.
Meanwhile, Sandler Capital Management is an investor in Golden, Colo.-based CK Media, publisher of five quilting publications and an organizer of an annual quilting symposium. The publications draw private equity money for one simple reason, says Dave O’Neil, CEO of CK Media: it’s a low capital-high margin business.
“That’s why the equity guys are interested,” he says. “It’s a good play for them.” O’Neil is the former vice president and group publisher of the Crafts Group at Primedia Inc., once a major periodicals publisher that owned more than 120 magazines.
Raina declines to specify an exit strategy for New Track Media, but Adi Dahejia, managing partner at Sandler, says the typical investment period for his firm is about five years.
Similarly, Florence says that Frontenac is in no rush to part with Aspire.
“We’re looking to craft a business, not do a deal,” he says.