CMGI and Liberty Media to Make Investment in Primedia

Primedia expects revenues from new media doubling to $50 million in 2000.
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Tom Rogers took the reigns of

Primedia

(PRM)

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

CMGI

(CMGI)

and

Liberty Media

(LMG.A)

, 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

NBC

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

New York

magazine and in partnership with

Cablevision

(CVC)

, 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

IndustryClick

, which targets categories such as agribusiness and digital entertainment.

Liberty, a division of

AT&T

(T) - Get Report

, will invest $200 million in cash for its stake, which includes 1.5 million warrants in Primedia. Liberty and its Web affiliate,

Liberty Digital

(LDIG)

, 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

New York

and

Seventeen

, 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.