A local private equity group is doubling down on its hunch that magazines are poised for a comeback. At least, certain types of magazines.
Richmond-based Virginia Capital Partners just purchased a group of South Carolina business news publications out of bankruptcy. The firm said that there is still an upside in niche local news and that readers and potential advertisers are still out there.
Virginia Capital Partners, a $50 million private equity firm, has already tried its hand in the print media business. Last September, it bought Virginia Business magazine, a monthly statewide business publication. (You can read more about that here.)
Earlier in the decade, it bought a trade publication during the dotcom recession that catered to doctors. About seven years later, Virginia Capital sold it for $25 million.
“We kept our eye on the publishing business since we sold out of that one,” said Fred Russell, managing partner at Virginia Capital.
Virginia Capital came across the South Carolina deal by scouring bankruptcy filings. And when Ohio-based Brown Publishing Co. went bankrupt in May, Russell’s firm jumped at the chance to purchase the Charleston Regional Business Journal, GSA Business, the Columbia Regional Business Report, SCBIZ magazine and related websites.
“We were able to buy a substantial portfolio of assets at a substantial discount,” Russell said.
Virginia Capital did not disclose the purchase price of this latest deal, only that it was an all-cash deal.
“I’ll put it this way: We paid 95 percent less than the Brown paid for [the publications] in 2008,” Russell said.
With this latest deal, Russell said, his firm heard the same doubts from skeptics it did in 2000, “that print is dead and it’s all going online,” Russell said.
And he doesn’t totally disagree with the skeptics. Indeed, Russell said the death knell is ringing for large parts of the print media world.
“I think some of the print is going to die,” he said. “When it’s nothing more than news clippings or a wire service, I think that content is dead.”
That suffering of the media – particularly the business model for print journalism – is opening some doors for undervalued opportunities, Russell said.
“There’s a lot of print product on the market and a number of very distressed sellers on the market,” Russell said.
Following the deal, Virginia Capital is the majority owner of the publications.
The publisher, who will continue to run the day-to-day operations, also owns a percentage.
Virginia Capital Partners now also employs an editorial staff of about 30 people spread across South Carolina. Russell said his firm has no intention of trying to run a news business.
“We’re just a bunch of bean counters here in Richmond,” he said. “You wouldn’t want us to run the news.”
The success of the gamble depends on advertising and whether advertisers in regions where Virginia Capital has media holdings will return to sustainable pre-recession levels. And although he’s confident that will happen, even Russell isn’t sure when.
“I think we all believe the ad cycle will come back. I just can’t tell you when. We could be well through 2011 before you have the worst behind us.”
Virginia Capital has not set a timeline for its exit strategy on this deal. Russell said it likely won’t look to exit for at least seven years and possibly up to 10 years.
“We don’t have any time horizon. We have the patience of Job. We always wait for the exit to find us.”
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
A local private equity group is doubling down on its hunch that magazines are poised for a comeback. At least, certain types of magazines.
Richmond-based Virginia Capital Partners just purchased a group of South Carolina business news publications out of bankruptcy. The firm said that there is still an upside in niche local news and that readers and potential advertisers are still out there.
Virginia Capital Partners, a $50 million private equity firm, has already tried its hand in the print media business. Last September, it bought Virginia Business magazine, a monthly statewide business publication. (You can read more about that here.)
Earlier in the decade, it bought a trade publication during the dotcom recession that catered to doctors. About seven years later, Virginia Capital sold it for $25 million.
“We kept our eye on the publishing business since we sold out of that one,” said Fred Russell, managing partner at Virginia Capital.
Virginia Capital came across the South Carolina deal by scouring bankruptcy filings. And when Ohio-based Brown Publishing Co. went bankrupt in May, Russell’s firm jumped at the chance to purchase the Charleston Regional Business Journal, GSA Business, the Columbia Regional Business Report, SCBIZ magazine and related websites.
“We were able to buy a substantial portfolio of assets at a substantial discount,” Russell said.
Virginia Capital did not disclose the purchase price of this latest deal, only that it was an all-cash deal.
“I’ll put it this way: We paid 95 percent less than the Brown paid for [the publications] in 2008,” Russell said.
With this latest deal, Russell said, his firm heard the same doubts from skeptics it did in 2000, “that print is dead and it’s all going online,” Russell said.
And he doesn’t totally disagree with the skeptics. Indeed, Russell said the death knell is ringing for large parts of the print media world.
“I think some of the print is going to die,” he said. “When it’s nothing more than news clippings or a wire service, I think that content is dead.”
That suffering of the media – particularly the business model for print journalism – is opening some doors for undervalued opportunities, Russell said.
“There’s a lot of print product on the market and a number of very distressed sellers on the market,” Russell said.
Following the deal, Virginia Capital is the majority owner of the publications.
The publisher, who will continue to run the day-to-day operations, also owns a percentage.
Virginia Capital Partners now also employs an editorial staff of about 30 people spread across South Carolina. Russell said his firm has no intention of trying to run a news business.
“We’re just a bunch of bean counters here in Richmond,” he said. “You wouldn’t want us to run the news.”
The success of the gamble depends on advertising and whether advertisers in regions where Virginia Capital has media holdings will return to sustainable pre-recession levels. And although he’s confident that will happen, even Russell isn’t sure when.
“I think we all believe the ad cycle will come back. I just can’t tell you when. We could be well through 2011 before you have the worst behind us.”
Virginia Capital has not set a timeline for its exit strategy on this deal. Russell said it likely won’t look to exit for at least seven years and possibly up to 10 years.
“We don’t have any time horizon. We have the patience of Job. We always wait for the exit to find us.”
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
Great. Glad that others seem to know print is NOT dead. And online ads are annoying and give me a headache!
Print is absolutely dead, the only reason these magazines have a chance at profitability is because their readership is primarily 45+ years old. As that generation disappears from the business world, so will these publications.