With its $100 million deal to sell the National Enquirer still in limbo after 10 months, American Media is going elsewhere to grab cash.
The owner of gossip mags like US Weekly and In Touch just sold its collection of fitness magazine, including Muscle & Fitness, as well as its bodybuilding trade show business, which includes the Mr. Olympia competition.
Terms were not disclosed — but it was somewhere below the $90 million threshold that would have triggered an automatic antitrust review under the Hart-Scott-Rodino Act. One source close to the deal said the sale was for around $70 million.
The new owner is Jake Wood, who owns a woman’s bodybuilding show, Wings of Strength. The magazines, which include Muscle & Fitness, Muscle & Fitness Hers and Flex, will be dropping print and going all digital, Media Ink has learned.
“As we phase out the print publication, we will allocate significant resources to further develop our digital strategy,” said Dan Solomon, who ran the trade show for AMI and has signed a new five-year deal as the CEO of the group for the new owner.
“Regarding staff, key staff in the areas of ad sales, editorial and event production have been transitioned to the new ownership,” he said.
Muscle & Fitness Editor Zack Zeigler could not be reached via the AMI switchboard, however.
American Media claims the sale was done in the ordinary course of business to pay down debt. A spokesman for Chatham Asset Management, which has both debt and 80 percent of the American Media equity, said the proceeds from the sale will help the publisher to cut its first lien senior debt — estimated at $235 million — by some 35 percent, or $82 million, in 2020.
Chatham invested money into American Media’s parent company, Worldwide Media Services, at the close of 2019. A Chatham spokesman insisted the money was not an AMI “lifeline,” as several sources speculated. Despite the company appearing to shrink, the spokesman insisted the infusion was for “expansion initiatives” at American Media and a distribution company owned by Worldwide.
Sources tell Media Ink the company sorely needed the dough as it waits — seemingly indefinitely — to complete its sale of the Enquirer.
“The sale was needed to keep the lights on” said Joe Palazzolo, who co-authored with Michael Rothfeld the “The Fixers: The Bottom-Feeders, Crooked Lawyers, Gossipmongers and Porn Stars Who Created the 45th President of the United States.”
A spokesman insisted, “American Media has continued to grow its portfolio since 2017, adding to its roster of celebrity and digital properties with the acquisitions of Us Weekly, Men’s Journal, The Bauer US Celebrity and Teen groups, and the Adventure Sports Network, including the Dew Tour. The company’s portfolio of brands has doubled since 2017, and all continue to be significant sources of revenue for the company.”
But the debt-financed buying spree may have contributed to its problems.
The celebrity magazines sold 7 million fewer copies in 2019 than the year before, sources said, although a spokesman said that a $1 cover price hike offset some of the hit.
Currently, American Media’s debt payments are about $41 million a year on debt of $460 million that remained after the last restructuring in January 2019.
Meanwhile, the tentative agreement to sell the Enquirer that was announced in late April — with a plan for Jimmy Cohen, the chief executive of the magazine wholesaler Hudson News, to pay $100 million and publish it through a new company — remains stalled.
Many industry-watchers saw the announcement as a way for Cohen to come to the aid of American Media Chief Executive David Pecker, a longtime business associate and pal, and for Chatham to claim it was ridding itself of scandal-scarred asset that was making its investors nervous.
But 10 months later, the money still has not changed hands, and American Media remains in control of its editorial and business operations.
“We think the Cohen sale is on hold until they get some sort of signal from the US Attorney that they are in the clear,” said Palazzolo. While AMI officials were given initial immunity to testify about the hush-money payments to two women who claimed to have slept with President Trump, AMI may have figured in subsequent investigations into Trump’s finances that raised some new questions. Michael Cohen, Trump’s personal attorney and fixer, was sentenced to jail partly on testimony of AMI executives.
Jimmy Cohen did not return a call seeking comment.
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