Future Network, the struggling publisher of special-interest magazines, yesterday sold its flagship New Economy Business 2.0 magazine for $39.4m (£26.4m) net in cash to US publisher Time, a division of the media giant AOL TimeWarner.
Time plans to merge the US publication with its own eCompany Now title under the Business 2.0 name and expects the redesigned monthly to have a circulation of 550,000. If the new publication pulls in annual revenues exceeding $50m (£36.2m), Future is entitled to a 25 per cent cut for the next five years.
The US group is also taking over Business 2.0's related conference and online activities. Future will also get a quarter share of the revenues of these operations if they top $10m (£7.24m) a year. Future, founded by the multimillionaire Chris Anderson, also hopes to recover around $9m (£6.5m) of tax after the sale.
The loss-making company, which is 26 per cent owned by Mr Anderson, will use the proceeds to cut its £68.9m debt mountain to £42.6m. But it still needs to find substantial funds if it is to meet a target imposed by its bankers of reducing borrowings below £25m by the end of the year.
The group, which put the 2-year-old title up for sale in February, said Business 2.0 fell into the red in the four months to April as costs spiralled just as the advertising market turned down sharply. The magazine made a $15m profit in 2000.
Shares in Future rose 1.5p to 71p yesterday but remain well below their 926p peak early last year that valued Future at £1.3bn. The Bath-based company, which includes Elisabeth Murdoch among its non-executive directors, has issued a string of profits warnings since the tech bubble burst. It said yesterday that market conditions for the rest of its businesses remain challenging, although it did make a small profit in the first four months.
The disposal needs approval from Future's shareholders. Institutions and directors with 53 per cent control have already given irrevocable undertakings to vote in favour of the sale.Reuse content