Primedia, Dennis interest dwindling: sources

By Michael Flaherty and Megan Davies

NEW YORK (Reuters) - The auction for a division of magazine publisher Primedia Inc. (PRM.N: Quote, Profile, Research, Stock Buzz) has attracted several private equity buyers, but the process is cooling amid concerns about the unit's growth prospects, sources familiar with the matter said on Friday.

Private equity firms Elevation Partners, Quadrangle Group and Veronis Suhler Stevenson are among the buyout firms interested in Enthusiast Media, the sources said, but their interest is fading. The Primedia unit was expected to fetch around $1 billion, but sources say that may be too high.

Sources also said that interest in the auction for Dennis Publishing Inc., publisher of "Maxim" magazine, is thinning amid concerns about its own growth prospects.

The two auctions underscore the challenges facing print media, which is struggling as readers and advertisers move online. The climate is especially hard for consumer magazines, with revenues from newsstands, subscriptions and advertising all under pressure from the Internet.

"Nobody will tell you magazines are going to be the fastest-growing business on earth," said Quadrangle Group founder Steven Rattner, speaking at the Reuters Hedge Funds and Private Equity Summit in New York this week. "You have to have realistic price expectations ... They are going to sell at single digits, or should sell, on a fully managed basis, on single digit multiples."

Rattner did say that magazines have a little less to worry about than newspapers, as they do not face the loss of classified ads.

"A lot of the content is special-interest orientated and people are still willing to pay for it," he said.

Rattner declined to elaborate on Quadrangle's role in either Enthusiast Media or Dennis Publishing. Veronis Suhler Stevenson also declined to comment.  Continued...