Less than 24 hours after most NY papers claimed Glenda Bailey was to be replaced as the editor in chief of Harper's Bazaar, the NY Post reports today she may have dodged a bullet at Hearst Corp.

According to numbers that the company just submitted to the Audit Bureau of Circulations, its newsstand sales in the second half of 2002 were up 13.4 percent to 186,700. A company spokeswoman said it is the second consecutive newsstand increase reported by the magazine.

But the picture is not so simple. As correctly reported in NY Daily News yesterday, advertising pages were also off by 12.56 percent to 1,436. It is not clear if this drop was part of a trend in the entire fashion mags trade.

Subscriptions to HP were down 2 percent to 555,400, and as a result, total paid circulation was up a scant 1 percent to 742,100.

A Hearst spokeswoman insisted that the company is managing its circulation and that the subscription dip was by design.

After Successfully Reducing Debt, Primedia Explores Sale of Seventeen
By DAVID CARR THE NEW YORK TIMES

Primedia Inc. announced yesterday that it would explore a sale of Seventeen magazine, the largest teenage magazine.

The company made the announcement at the same time it reported that it had hit its earnings target for 2002 in a very tough year in publishing. The sale of Seventeen would continue the company's efforts to sell consumer magazines to reduce debt and focus its energies on its 250 business-to-business and hobbyist magazines, including Fly Fisherman and Power & Motoryacht. Morgan Stanley has been retained to assist in the possible sale of Seventeen.

Primedia's sole remaining consumer magazine would be New York, and analysts speculated that Primedia, which is controlled by Kohlberg Kravis Roberts & Company, might quit the consumer business altogether. Tom Rogers, chief executive of Primedia, said, however, that there were no such plans.

"New York magazine continues to be a solid part of Primedia's growth going forward," Mr. Rogers said.

In the last year, Primedia has sold Modern Bride, American Baby and Chicago magazine to help meet promises to reduce its debt of more than $2 billion, and has raised $345 million. Still, the company is interested in further reducing its obligations. An executive close to the company said he expected that Seventeen, which has revenue of $100 million, could bring as much as $200 million in a sale. But analysts and bankers said it could sell for up to $300 million, in part because sales of large consumer magazines are rare and because the 58-year-old magazine is so well known.

Seventeen, which has a circulation of 2.43 million and 15 overseas editions, has been under ferocious competition from YM, owned by Gruner & Jahr USA; CosmoGirl, owned by Hearst; and Teen People from Time Inc. The magazine is beginning to show its age at a time when yet more teenage magazines, including Teen Vogue from Condé Nast, are entering the fray.

Although sales of ad pages at Seventeen were essentially flat last year, a publishing executive at Primedia said that deep discounting was under way to maintain ad volume. Newsstand sales, a crucial indicator of current consumer interest, fell 21.5 percent in the first six months of last year compared with 2001 and executives at the company said the trend continued throughout the year. The magazine recently hired a new editor in chief, Sabrina Weill, who had been executive editor at CosmoGirl. Ms. Weill's first issue will be out in March and is receiving good reviews within the company.

Mr. Rogers said Primedia was approached by a consumer marketer in December who was interested in forming a partnership involving the magazine, and, so, he decided to find out what Seventeen might be worth on the open market. Mr. Rogers said in the past that he was not interested in selling the magazine.

"It was very unlikely that we would sell Seventeen as part of what we were focused on last year," he said yesterday. "But the offer we received offered a prospect for growth and unleashing value, and we thought we should explore what else might be out there."

Most analysts say they believe that the buyer of the magazine will be another publishing company as opposed to financial investors, in part because an existing publishing company could wring the most value out of Seventeen's subscriber list and relationships with advertisers.

"Condé Nast wants it and can afford it," said Mark Edmiston, managing director of AdMedia Partners. "Hearst wants it and can afford it. Gruner & Jahr wants it and could afford it. There are any number of interested buyers out there, and they don't have to sell, but it might be a great time to find out what it is worth."

A spokeswoman for Gruner & Jahr USA said yesterday that it would "take a look;" the other companies declined to comment on their possible interest.

An executive who formerly worked at Primedia said the magazine was in "a free fall" at newsstands and that profits, which were once $30 million a year, were now almost half of that.

"I think that they realize that they still have a valuable property on their hands," the executive said, "but it is getting less valuable every day. They probably want to sell it while it is still the No. 1 magazine in the category."

Seventeen has been the biggest teenagers' magazine for decades, but YM now has a circulation of 2.26 million and gained 33 percent in ad pages last year. In 1998, Time Inc., perceiving some weakness in Seventeen, started Teen People, which now has an average paid circulation of nearly 1.7 million. CosmoGirl, first published in 2000, quickly surpassed 1 million in circulation. More recently, Hachette Filipacchi Media USA introduced Elle Girl, and Condé Nast started Teen Vogue.

The announcement that the company was willing to consider offers came on a day when the company had good news about its financial performance. It expects to announce complete fourth-quarter results next Wednesday. For the fourth quarter, consolidated earnings before interest, taxes, depreciation and amortization from Primedia's continuing businesses rose about 63 percent, to $96 million from the year-earlier period. For the year, earnings from continuing businesses climbed about 33 percent, to $250 million. The performance exceeded the forecast the company had given analysts, but the stock fell 4 cents, to $2.41.

"I think that they have done a pretty extraordinary job of cutting costs," said David Allen, a portfolio manager at GoldenTree Asset Management. "They managed to grow cash flow in 2002 without much revenue growth. Although the market was very skeptical that they would hit their numbers a year ago, they really delivered."

Mr. Allen said that he expected the company to sell Seventeen only if it obtained a price that would significantly reduce its debt.

"They don't need to sell," he said. "They have accomplished the debt reduction they said they would and stabilized the business, which gives them the luxury of waiting for the right price."