The thesis behind media buyouts today is that with advertising rates finally on the uptick after a two-year slide and media property valuations still sitting at ground level, the time is right to get in the sector and enjoy its ride back up. Wind Point Partners is hoping to capitalize on this potential lift with its latest acquisition of Sabot Publishing, which will serve as the foundation for its new Active Interest Media enthusiast magazine platform.
“We have invested in media companies in the past, but in the late 90s multiples were so high, we stayed away,” Wind Point Managing Director Jim TenBroek said. “The advertising cycle has gone down, so we felt we were off the peak.”
Wind Point partnered with Times Mirror veteran Efrem “Skip” Zimbalist III to set up the media platform, initiating the relationship more than a year ago to begin looking at properties in the space. With an initial commitment of $40 million to pursue acquisitions and a buying power of $100 million, Active Media intends to target niche enthusiast magazines. “These are subscription and advertiser focused businesses,” TenBroek said. “There are a number of reasons we like the enthusiast space: Advertisers are generally more loyal and there’s usually a diversity of revenue streams.” TenBroek pointed out that the Sabot Publishing platform, for example, can also generate sales through book titles, videos or event sponsorships.
With the purchase of Sabot to anchor the platform, Wind Point believes it has found a company with the “financial scale” and “right blend of market-leading brands” to build around, according to Zimbalist. The company’s catalog of titles includes Southwest Art, Vegetarian Times, Black Belt and FightSport, among others.
Terms of the Sabot purchase were not disclosed, although TenBroek did say MCG Capital provided a senior and subordinated debt package for the financing. Wind Point expects to amass at least 10 acquisitions through Active Media, and hopes to build the business to more than $150 million in revenue.
The company will keep its focus on the “smaller” titles that become available. “We think a lot of the value creation is finding the smaller individual titles. There have not been any active buyers in this arena since the 90s and there’s a bit of a backlog now,” TenBroek said.
For the transaction, Wind Point used its $476 million Wind Point Partners V fund, which following the acquisition is roughly 40% committed and 25% invested.
Sabot Publishing’s Lawyer: Sonnenschein, Nath & Rosenthal
Sabot Publishing Advisor: Jordan Edminston Group
Wind Point Accoutnant: Ernst & Young
Wind Point’s Lawyer: Dickinson Wright