Emap, the troubled British media group, yesterday tried to draw a line under its disastrous foray into the US as it agreed to sell Emap USA to the rival American magazine publisher Primedia for a knock-down $515m (£366m).
The British group also admitted it would be forced to book a £126m loss on completion of the disposal, on top of the £545m write-down on the value of Emap USA it took in its results for the year to March. The write-down sent the group into the red last year for the first time in a decade. The misguided move across the Atlantic has already claimed the scalp of Kevin Hand, the former chief executive who left Emap by mutual agreement five weeks ago.
Emap bought the US publisher, then known as Petersen, in January 1999 for $1.2bn. It planned to use the business as a launch pad for its own consumer titles such as the popular FHM men's lifestyle magazine.
Problems quickly surfaced as automotive advertising, which provided 50 per cent of Emap USA's revenues, fell off a cliff shortly after the acquisition. The business also suffered as staff deserted to dot.coms and supermarkets stopped stocking small-circulation magazines.
Robin Miller, who moved from the chairman's position at Emap to take over as chief executive after Mr Hand left, said the company is keeping the US edition of FHM and plans to develop it further.
He said Emap would receive $505m in cash and the rest of the sum in Primedia warrants. The cash will be used to cut Emap's debt to £294m.
"The impending sale closes a difficult and unhappy chapter in Emap's history," said Mr Miller. "In the context of a difficult US market we regard the sale as a reasonable result."
Analysts had hoped Emap could find a buyer willing to pay between £450m and £500m for the US arm, which publishes titles including Guns & Ammo, Teen and Hot Rod.
Emap hopes to restore investor confidence in the business by focusing on its core radio, magazine and exhibitions operations in the UK and France.
"With a renewed focus on our core skills and core assets, I am confident we can move our business forward and regain the success that both we, and our shareholders, are used to at Emap," Mr Miller said.
Shares in Emap rose 4 per cent, or 27.5p, to 727.5p. The price has fallen from a high of 1,773p in early 2000 cutting the group's market value from £4.52bn to £1.85bn. The company lost its place in the FTSE 100 index along the way.Reuse content