Tom Rogers took the reigns of
last October to push the company into the Internet age. On Thursday, the magazine company announced a series of moves aimed at doing just that.
The two biggest moves involve investments from Internet incubator
, each of which took 5% stakes in Primedia.
Investors applauded the announcements, sending Primedia shares soaring. By midday Thursday, Primedia was up 5 5/8, or 21%, to 32 3/4. (Primedia closed up 4 3/8, or 16%, at 31 1/2).
"Since I joined Primedia five months ago, our team moved very quickly to change the strategy and culture of Primedia," Rogers, who left
to become Primedia's chairman and chief executive, said in a statement. "These transactions give us significant traction in our new media efforts."
The agreements come on the heels of a deal Primedia announced earlier this week to create a New York-centric Web portal, anchored by Primedia's
magazine and in partnership with
, the dominant cable presence in New York.
CMGI will acquire its stake in Primedia in exchange for 1.53 million shares of its highflying stock. The two companies will form business-to-business and business-to-consumer joint ventures. The B2B venture will center around Primedia's portal
, which targets categories such as agribusiness and digital entertainment.
Liberty, a division of
, will invest $200 million in cash for its stake, which includes 1.5 million warrants in Primedia. Liberty and its Web affiliate,
, will get an option to acquire a 12.5% stake in Primedia's new broadband video unit. Primedia said it will buy $25 million worth of stock in Liberty Digital to help fortify the relationship between the two companies.
CMGI shares fell 3 3/4, or 3%, to 108 1/16, while Liberty Media declined 1, or 2%, to 58 3/4. Liberty Digital dropped 2 7/8, or 7%, to 37. (CMGI closed down 2 9/16, or 2%, at 109 5/8, while Liberty Media closed down 1 11/16, or 3%, at 58 1/16. Liberty Digital closed down 9, or 23 %, at 36 3/4).
Primedia forecasts revenues from new media doubling to $50 million in 2000 and reaching $100 million in 2001. The company expects a loss in its new-media units of $80 million to $90 million this year, up from $32 million in 1999, and forecasts savings of $25 million to $35 million before interest, taxes, depreciation and amortization in 2001.
Primedia also said it was reorganizing into two segments for its various holdings: a consumer group, including core magazine holdings such as
, and a B2B group for its trade publications.
"Primedia was just too hard to understand, and we need a public face that mirrors our new organization,'' Rogers said.