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Landmark Will Be Underwhelmed By Offers For The Employment Guide
As I have written about previously, Landmark Communications has put its media assets up for sale. In addition to The Weather Channel, the crown jewel of the group, the private equity firm owns a bunch of small and medium-sized dailies and community newspapers, shoppers and weeklies, and the Employment Guide. Lehman Brothers, who is handling the transaction, has split the assets into two groups – The Weather Channel and Weather.com in one group, and eveything else in the other.
Bids for the The Weather Channel were due a few weeks ago, and according to Multichannel.com, Time Warner has dropped out of the auction and Landmark has entered into exclusive negotiations with a consortium that includes NBC Universal, Blackstone, and Bain. Their bid reportedly included $1.8 billion in equity and $1.7 billion in debt for a total of $3.5 billion, well below the $5 billion asking price.
If the top bid for a premium asset like the Weather Channel was 30% below expectations, wait until the bids come in for Landmark’s daily and weekly newspapers. I’d be surprised if the print assets end up being sold as a block, and my guess is that the Employment Guide will fetch a price somewhere between 25-50% of the asking price. Using a very quick and crude, back-of-the-envelope calculation, I’d guess that that number is somewhere between $25-$35 million (my best-case estimate is revenue of $50-$60 million, slightly positive EBITDA (maybe) although they get favorable distribution subsidies from Dominion, the distribution company also owned by Landmark, and break-even or negative net income. I will say, however, that if the Employment Guide is struggling as badly as they appear to be in the markets where we’ve seen them, these numbers are all way too optimistic). The numbers are obviously just a guess, but it will be interesting to see what happens in the next few months.