Motor Trend, Automobile sold to Source Interlink

It appears that today is the day for shedding divisions, as in addition to news that Daimler has sold a majority stake in Chrysler to the Cerberus Group, we've also learned that Primedia has finally unloaded its Enthusiast Media division to Source Interlink. The Enthusiast Media division of Primedia includes 70 magazines titles and 90 websites, including Motor Trend and Automobile Magazine, among others.
Source Interlink appears to work in the field of distribution, which should fit well with the Enthusiast Media division that produces dozens of magazine titles each month needing to find their way onto newsstands across the world. It appears that the purchase will make Source Interlink a vertically integrated producer and distributor of content from this point on. Though a copy of Motor Trend goes for about $4 on the newsstand, Source Interlink paid $1.2 billion for it and its siblings thanks to financing support from Citigroup Global Markets, Inc.
Like the sale of Chrysler to Cerberus, only time will tell if these sell offs benefit the seller, the sold and the buyer. You can read the full press release from Source Interlink detailing the sale after the jump.
[Source: Source Link via Winding Road]
PRESS RELEASE:
SOURCE INTERLINK COMPANIES TO ACQUIRE PRIMEDIA'S ENTHUSIAST MEDIA SEGMENT
- Transaction creates vertically-integrated media company with leading content and a
powerful distribution and merchandising platform -
- Company expects transaction to be accretive to adjusted earnings per share
exclusive of one time costs -
Bonita Springs, FL, May 14, 2007 - Source Interlink Companies, Inc. (NASDAQ: SORC), a
leading provider of merchandising and fulfillment services for home entertainment products, is
pleased to announce that it has signed a definitive stock purchase agreement to acquire
PRIMEDIA Inc.'s (NYSE: PRM) Enthusiast Media division (EM) for approximately $1.2 billion.
The all-cash transaction combines EM's industry-leading magazine content portfolio, containing
over 70 magazine titles and 90 Web sites, with Source Interlink's premier magazine distribution
and merchandising platform, creating a leading vertically integrated media, publishing,
merchandising and distribution company.
To fund the acquisition, Source Interlink has secured a financing commitment from Citigroup
Global Markets, Inc.
EM is one of the largest providers of print and digital media content to the enthusiast community,
with more than 70 magazine titles, 90 Web sites, over 65 events, a television program, and 400
branded products. It is the #1 special interest magazine publisher in the U.S., and its portfolio of
well-known niche magazine titles and content brands includes: Motor Trend magazine,
Automobile magazine, Hot Rod magazine, Lowrider magazine, Soap Opera Digest and Soap
Opera Weekly magazines, Power & Motoryacht magazine and, Surfer and Snowboarder
magazines.
For fiscal year 2006, EM had revenues of $524.8 million. Source Interlink estimates that the
combined companies generate approximately $2.4 billion in revenue and more than $180 million
in EBITDA on an annualized basis. Source Interlink expects the transaction to be accretive to
adjusted earnings per share exclusive of one time costs.
The transaction is expected to close mid-summer, and is subject to regulatory approvals and other
customary closing conditions. Following the completion of the transaction, EM will operate as a
division of Source Interlink and will be headed by Steve Parr, EM's current president. He will
report to Michael Duckworth, Chairman of Source Interlink.
Michael Duckworth commented, "Our review of strategic alternatives is complete and our
direction is clear. Over the last several years Source has driven the consolidation of a fragmented
and inefficient channel for the distribution and merchandising of home entertainment content at
retail and the newsstand. This acquisition is a first step to leverage what we have built by
transforming Source into a fully integrated media company with both print and digital content.
EM's industry-leading special interest magazine titles and consumer Web sites diversifies our
earnings streams and accelerates our growth. Under the leadership of Steve Parr, EM has
developed a strategy for growth that capitalizes on the changes taking place in the media
environment. We welcome Steve and his team to Source and we look forward to building on the
solid foundation they have created."
"We are delighted with the end result of this process," said Dean Nelson, CEO of PRIMEDIA.
"We are able to emerge from this auction virtually debt free and completely focused on our
Consumer Source business. At the same time, we believe that Source Interlink will be a terrific
home for our Enthusiast Media Group and will continue to thrive under their ownership. We
thank the EM team for their hard work and commitment and we wish Steve Parr and the entire
team all the best."
About Source Interlink Companies, Inc.
Source Interlink Companies is a leading marketing, merchandising and fulfillment company of
entertainment products, including DVDs, music CDs, magazines, books and related items. The
Company's fully integrated businesses include:
• Distribution and fulfillment of entertainment products to major retail chains throughout
North America and directly to consumers of entertainment products ordered through the
Internet
• Import and export of periodicals sold in more than 100 markets worldwide
• Coordination of product selection and placement of impulse items sold at checkout
counters
• Processing and collection of rebate claims as well as management of sales data obtained
at the point-of-purchase
• Design, manufacture and installation of wire fixtures and displays in major retail chains
• Licensing of children's and family-friendly home entertainment products
Source Interlink serves approximately 110,000 retail store locations throughout North America.
Supply chain relationships include movie studios, record labels, magazine and newspaper
publishers, confectionary companies and manufacturers of general merchandise. For more
information, please visit the company's website at http://www.sourceinterlink.com.
About PRIMEDIA Inc.
PRIMEDIA Inc. is the parent company of Consumer Source Inc., the #1 publisher and distributor
of free consumer guides in the U.S. with Apartment Guide, Auto Guide, and New Home Guide,
distributing free consumer publications through its proprietary distribution network,
DistribuTech, in more than 60,000 locations. Consumer Source owns and operates leading
websites including ApartmentGuide.com, AutoGuide.com, NewHomeGuide.com; and America's
largest online single unit rental property business, comprised of RentClicks.com,
RentalHouses.com, HomeRentalAds.com, and Rentals.com.
Safe Harbor Statement-Source Interlink:
This press release contains certain "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995, including
statements relating to, among other things, (i) timing of the transaction, (ii) future business plans,
strategies and financial results, and (iii) growth potential.
These forward-looking statements reflect Source Interlink's current views about future events and are
subject to risks, uncertainties, assumptions and changes in circumstances that may cause future events,
achievements or results to differ materially from those expressed by the forward-looking statements.
Factors that could cause actual results to differ include: (i) the challenges and costs of closing, integration
and restructuring, (ii) interest rate volatility and the impact of a significant increase in the Company's debt
service obligations, (iii) market acceptance of and continuing retail demand for physical copies of
magazines, books, DVDs, CDs and other home entertainment products, (iv) our ability to realize additional
operating efficiencies, cost savings and other benefits from the acquisition, (v) an evolving market for
entertainment media, (vi) regulatory or other delays in completing the proposed purchase in a timely
manner or at all, (vii) the challenges maintaining relationships with suppliers; (viii) adverse changes in
general economic or market conditions; (ix) the ability to attract and retain employees pending
consummation of the transaction; (x) intense competition in the marketplace and (xi) other events and other
important factors disclosed previously and from time to time in Source Interlink's filings with the Securities
and Exchange Commission, including its Annual Report on Form 10-K filed with the Securities and
Exchange Commission on April 25, 2007.
Source Interlink does not intend to, and disclaims any duty or obligation to, update or revise any forward-
looking statements or industry information set forth in this press release to reflect new information, future
events or otherwise.




![Bugatti Bird-gate Followup: Driver identity revealed <b>[*UPDATE:</b> Now with actual crash video!]](http://www.blogcdn.com/www.autoblog.com/media/2009/11/bugatti-veyron-swim-1258147199_143x85.jpg)


Get a WordPress.com Blog




Reader Comments (Page 1 of 1)
Will 3:58PM (5/14/2007)
Quite allright, really. I've felt let down recently by Motor Trend, (and wrote them to let 'em know), with seemingly all of their content being available online. That's fine, if the magazine weren't something I've been paying for the last 10 years.
I don't have a problem with subscribers having access to videos, HQ pictures, etc, but to throw them out there for the world just seems silly, considering the $4 cover price for the rag itself. Oh well, this is a trend that is going to take some getting used to, I guess.
Reply
Viv 4:15PM (5/14/2007)
Even though all of MT's contene is available for free online i just like to have a freshly bent magazine (thanks USPS) in my hand at the end of every month. Just don't increase the rates.
Reply
mj 4:28PM (5/14/2007)
There's no doubt to compete with Autoblog and others, they need to go online for free. Print magazines are for pretty pictures.
I got the sense that Automobile would be bankrupt soon. Anyone else get that suspicion when reading their magazine?
Reply
Mr. Big Stuff 4:32PM (5/14/2007)
Motortrend and rest of the Auto Mag's sold out big time to the imports, and for that they have paid the price. For years they sucked up to the Japanese manufactures because of big advertising buck, not realizing that old time subscribers were writing them off by the thousands. They are now reaping what they have sown, not one hill of their harvest is undeserved. They too are finding vulnerability uncomfortable, they have made their beds now let them die in them.
Reply
Clinton 4:49PM (5/14/2007)
Autoweek FTW!
Reply
Timmi 4:55PM (5/14/2007)
Have to agree that there are far to many reviews of foreign supercars and other junk no real person would ever buy. Who cares? How about a review of $18,000 sedans from the perspective of someone with a family of five? Can you get plenty of stuff in the trunk? Can the kids sit in back comfortably? Is it going to strand the wife on the fwy at 10:00 at night? What's the real world MPG when driven like a real person? Who really cares about pulling G's or hitting 100mph in the 1/4 mile? That's why no one reads that crap any more.
Reply
Adam 5:14PM (5/14/2007)
For everyone complaining about revews of super cars and performance cars, go read Consumer Reports. The mags like this are for enthsiasts. Also, bear in mind that there are alot of pages to fill and only so many cars to review. Honestly, I think they give fair coverage to the more pedestrian cars. At least as much as they deserve. Do you realy want to read a comparison of the Camry/Malibu/Accord/Fusion/etc. every month? And, in case you are worried about real world cars, there has been TONS of attention being paid to the practical and fast (pocket rockets like the GTI, Mini S, Civic SI, etc)as of late. Those cars are practical and interesting. Face it, family sedans are boring. No one wants to read about them. Those who do should read, as I said, Consumer Reports. "Who really cares about pulling G's or hitting 100mph in the 1/4 mile? " The majority of automotive enthusiasts, I would say.
The reason no one reads magazines (or any print media for that matter) has much more to do with avaiablity of free, quality online content. Not fallout from some cabal between forgien automakers, super car purveyors, and the automotive print journalists of the world.
Reply
Frank 5:29PM (5/14/2007)
I still prefer magazines. The internet is good for up to the minute news, however the overall writing is poor. Sorry Autoblog included. Magazines do a much better job of road test writing. I also prefer the long format articles that magazines do. Pick up an issue of EVO to see what I mean. Magazines are for people who enjoy reading.
Reply
Don 6:02PM (5/14/2007)
Motor Trend and especially Automobile have been the red-headed stepchild of the auto magazine world for some time now.
Motor Trend hasn't been that great for years, and Jean Jennings managed to run Automobile into the ground.
Still, though...this can't be good for either mag.
Reply
srivendel 6:26PM (5/14/2007)
Until I can read the websites -- comfortably -- from my porcelain throne, I will stick with the print versions.
Reply
Rich 8:35PM (5/14/2007)
I read DED's similar comments re- Jennings running Automobile "into the ground" in this mo's "Winding Road" e-issue...I truly am asking: How did she do that?
Reply
dieselman 6:35AM (5/15/2007)
why all this blabla about how "bad" is MotorTrend?
Then why did "Car and Driver" changed its format/layout, etc...to better copy MT?? Because it was THAT bad?
After CaD did this, I have made a subscription for MT as well...just to see how the "original" looks like and why CD threw away years of "classy-ness" to be a MT clone.
Reply
Big Mike Wood 3:21PM (5/15/2007)
I love magazines but maybe I'm old fashioned. Magazines are portable - online content really isn't and probably will never fully replace hardcopy.
I'd also agree that 1/4 mile times and lateral acceleration are fairly pointless. I'm a lifelong enthusiast (been a subscriber to at least one of the major four, if not more, for the past 20 years) and when I get to yet another Ferrari or Lambo review I just tune out. Is fun-to-drive important? You bet, but I have little interest in reading about F1 results or some tour of Spain in some Italian car I'll never see in person in my entire life. When you're 16 it's fun to dream and hang the posters on your wall, but when you reach 40 you're just looking for something realistic. At least I am.
I'd love to read more stories about tire tests, long term tests that actually tell me something about how reliable a car is and how it stays together over time. Or how about oil tests - is there really a difference? What about waxes? What about real world performance gains for various aftermarket upgrades? How about more comparisons in general? A road test is fine but when shopping I want to see how it stands up to it's competitors, and not just from a performance perspective. Tell me something that has value - something not readily found at other sources.
The list is endless, but this is why people don't buy these mags any more.
Reply