CBS Inc. today agreed to pay $362.5 million for the 12 consumer magazines owned by Ziff-Davis Publishing Co., including Popular Photography, Car and Driver, Modern Bride and Yachting.
The proposed purchase cements CBS' position in the magazine industry, more than doubling its stable of magazines. But one magazine industry source suggested that the media giant could face antitrust problems because several of the Ziff-Davis and CBS magazines are direct competitors. A Justice Department spokesman said either that department or the Federal Trade Commission will examine the proposed transaction for possible antitrust violations.
The proposed deal ends the first half of an auction of the bulk of Ziff-Davis' magazine publishing operations. The company is expected to name a buyer within the next few days for its 12 business and trade magazines, including Meetings & Conventions and Business & Commercial Aviation.
Ziff-Davis owner William Ziff put the 24 magazines up for sale in October, citing "personal reasons" that some reports have identified as health problems. The auction of the magazines reportedly drew some of the biggest names in publishing, with Time Inc., Times Mirror Co., The New York Times Co., and Hearst Corp. either expressing interest or making formal bids, according to industry sources.
Once the two groups of magazines are sold, Ziff will have 11 magazines remaining, all in the computer field; a software publishing company; two computer databases; and several hundred million dollars.
In announcing his company's purchase plans, CBS Chairman Thomas H. Wyman said, "This is a rare opportunity to acquire a very professional, well-managed business and to meet our strategic goal of significant growth and leadership in consumer magazine publishing."
Analysts said CBS has made it clear for some time that it wants to expand in the magazine industry. "CBS is interested in identifying itself with this field so this purchase is not very surprising," said J. Kendrick Noble Jr., a publishing-industry analyst at Paine Webber. "It was a good operation, well run." By combining its magazines with those of Ziff-Davis, analysts said, CBS can offer combination discounts to advertisers and gain volume savings in printing and circulation costs.
One magazine-industry expert, however, suggested that CBS was paying too high a price for the Ziff-Davis properties. "The pricing, based on what the consumer group does in earnings, is very, very rich," the source said. The magazines had about $32 million in earnings last year on $130 million in revenue.
The best-selling of the Ziff-Davis magazines is Popular Photography, which has 925,000 subscribers and annual revenue of $37.5 million. But one of its principal competitors is CBS' American Photographer. Similarly, Ziff-Davis' Car and Driver goes head-to-head with CBS' Road and Track, and Ziff-Davis' Stereo Review is a major competitor of CBS' Audio.
"They've got so many competing titles here that my guess is they're going to have Justice Department problems," an industry source said. "I've got to believe somebody's going to look real hard at that."