Primedia, Internet Content Play?
Most people assumed that when Primedia (NYSE:PRM) sold its About.com (www.about.com) operations to the New York Times Company (NYSE:NYT), it exited the internet content game. Think again.
The company has a lot of debt, and it has been a painful play for most of investors. After hitting $4.75 last spring, it has settled just south of $2 for the last few months. Q4 05 revenues rose slightly from a year earlier to $252.3 million. EBITDA dropped slightly to $50 million. Debt service eats all of that up, plus some. The debt does not really start to mature until 2010.
The company's build out of its automotive.com and equine.com platforms is an impressive start to gaining a significant share of the online dollars in those categories. The company's apartmentguide.com business is showing impressive traffic growth. Expanding further into the real estate arena, the company has moved into online rentals (www.rentclick.com) and new homes (www.newhomeguide.com).
It is probably safe to assume that Primedia's print businesses that mirror these internet sites can supply most of the content without burdening the online business with significant extra costs. If so, Primedia may well have found an engine for growth, which it has not done successfully in print.
Keep an eye on the internet businesses at Primedia. They may be the smartest thing the company has done in a long time.
Most people assumed that when Primedia (NYSE:PRM) sold its About.com (www.about.com) operations to the New York Times Company (NYSE:NYT), it exited the internet content game. Think again.
The company has a lot of debt, and it has been a painful play for most of investors. After hitting $4.75 last spring, it has settled just south of $2 for the last few months. Q4 05 revenues rose slightly from a year earlier to $252.3 million. EBITDA dropped slightly to $50 million. Debt service eats all of that up, plus some. The debt does not really start to mature until 2010.
The company's build out of its automotive.com and equine.com platforms is an impressive start to gaining a significant share of the online dollars in those categories. The company's apartmentguide.com business is showing impressive traffic growth. Expanding further into the real estate arena, the company has moved into online rentals (www.rentclick.com) and new homes (www.newhomeguide.com).
It is probably safe to assume that Primedia's print businesses that mirror these internet sites can supply most of the content without burdening the online business with significant extra costs. If so, Primedia may well have found an engine for growth, which it has not done successfully in print.
Keep an eye on the internet businesses at Primedia. They may be the smartest thing the company has done in a long time.
posted by douglas mcintyre at 12:04 PM
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