When Red Herring was recently declared dead, someone forgot to check its pulse.
Turns out the founders of the magazine, which once focused on aspects of the private equity world, are trying to assemble an investor group to purchase its assets and re-launch the magazine.
Chris Alden, co-founder and onetime CEO of the magazine, said he and former Editor-in-Chief Tony Perkins “plus all the original founders and most of the top execs through the years are working on putting a bid together.” The other two co-founders are Ron Conway, founder and general partner of Angel Investors LP, and Zachary Herlick, a former general partner of Seattle venture firm Maveron.
Red Herring officially closed its doors March 3, just shy of its 10th birthday. It burned through as much as $64 million in venture capital and once had a post-money valuation of $200 million, according to Venture Economics, publisher of Buyouts. The biggest loser in the magazine’s failure is Broadview Capital, which sank at least $45 million into the company, according to a knowledgeable source.
Alden said he has found no shortage of people interested in putting up money to restart the magazine, but he’s open to hearing from others. “If people want to participate and want to be a part of the rebirth of the Herring, have them send me an email,” he says.
Alden and his cohorts aren’t the only ones that see value. Paul Hale, who is handling the sale for DeSilva & Phillips, a New York-based media investment banker, says: “There’s a lot of interest,” and he’s received inquiries from more than a dozen parties, including non-U.S.-based companies and non-media companies.
Asked whether the magazine’s founders would be given any special consideration, Hale said: “I think it’s just a question of money.”
DeSilva & Phillips was hired by Broadview to sell Red Herring’s assets – its name, mailing list and old content. Hale hopes to have a deal completed by the end of March, although there is no hard deadline. Published reports say the price tag is $2 million, but Hale said he doesn’t know where that figure came from.
A source close to the magazine says he believes the assets can be purchased for about $500,000.
In this depressed economy, it is unlikely that Broadview will get a premium. Light Reading, an online publication, purchased Redherring.com’s subscriber list for less than $100,000, according to a source familiar with the transaction. “There are lots of these assets [both print and online mailing lists] around and they are generally priced in the thousands not millions of dollars,” the source says.
Broadview was the single largest shareholder. It participated in three of Red Herring’s financing rounds, initially putting up more than $25 million of a third round totaling $31 million in February 2000, according to an informed source.
Steven Bachman, a Broadview general partner who once sat on Red Herring’s board, declined to comment on the amount that Broadview invested.
The other key investor was Ziff-Davis Publishing (once part of Softbank), which put up $2 million in Red Herring’s first round in December 1997, $3 million in its second round in December 1998 and an undisclosed amount in the $31 million third round in 2000.
Red Herring has been struggling for several years, after living large during the dot-com boom. At its peak in 2000, it employed more than 300 people and ran three businesses: the print magazine, a Web site with a staff in excess of 30 people and an events department.
Finally, last October, the company went through a reorganization, and Broadview bought all of the assets, renaming the company RHC Media. That allowed RHC to get out of its onerous leases. It appeared to be hanging on, but once word leaked that Broadview had hired DeSilva & Phillips to sell the assets, advertisers grew skittish and Broadview pulled the plug.