Goldman Sachs Discovers Print; Now It Needs a Fearless Leader

The revelation on Monday, Feb. 19, that Goldman, Sachs & Co. Sign Up For Our Daily Newsletter Sign Up Thank

The revelation on Monday, Feb. 19, that Goldman, Sachs & Co.

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was poised to enter the magazine business left more than a few people confused.

Here was a publicly traded company, ready to invest $1 billion in a business

that seems to be teetering on the brink.

How committed Goldman is to the magazine world is uncertain.

According to one source familiar with the situation, that $1 billion may go

unspent if Goldman can’t find the right C.E.O.

“If they don’t find the right person they’d be happy with,” said

the source, “don’t expect them to do anything. If they’re doing a deal like

they’re talking about, I think they need their first choice.”

That might be difficult, since all the reported candidates

represent the lions of the trade. The list-first reported by Advertising Age , which also broke the Goldman

story-includes Condé Nast Publications president and chief executive Steve

Florio; Fairchild Publications president and chief executive Mary Berner; Don

Logan, chairman and chief executive of AOL Time Warner’s Time Inc.; Hearst

Magazines president Cathleen Black; Gruner & Jahr U.S.A. Publishing

president and chief executive Dan Brewster; Hachette Filipacchi Media president

and chief executive Jack Kliger; and Time Inc. executive vice president Mike


They were unsurprising candidates all. But some wondered: Were

they the kind of innovators a newcomer like Goldman might need to shake up the

print business? “They’ve named all the obvious people; I don’t know if that

necessarily makes it the right move,” said Eric Blankfein, vice president of

Horizon Media, a media buying company. “If they feel this business is built on

an antiquated structure, why would you try and get people used to that

structure-[who], in fact, created the structure? It was confusing to me.”

A source at Goldman, meanwhile, said that the money would come

from the Goldman Sachs Capital Partners 2000 fund. The source went on to

speculate that such a deal wouldn’t happen, since investments from that fund

have been much lower than $1 billion, typically between $100 million and $300


In any event, if Goldman has any particular plans or magazines in

mind, it has kept its mouth shut, even to potential C.E.O.’s. One executive

approached by the investment bank said that the company, while open about the

others it was courting, seemed murky, revealing neither the possible timing of

a launch for the division or what titles it was likely to acquire.

“They said ‘special interest,'” the executive said. “Quite

frankly, I don’t know what that means.”

Then again, Goldman may know exactly what it wants to do but is

being strategically coy, even to potential C.E.O.’s. One industry insider

familiar with the deal put the Goldman strategy this way: “What happens when

you’re putting something like this together is that you don’t want anyone to

know what you’re up to, because you don’t want to piss anyone off.” 

“In approaching C.E.O.’s,” the source said, “you don’t want to

say anything particular. You tell them you’re ready to buy assets. You say,

‘Sign up, and we’ll look for them together.'”

To be sure, they’re ready to look. As one source put it, the

company’s failed bid to buy IPC Group, the European magazine group, last year

showed that Goldman “had a big appetite for a big deal in the sector.” 

And why not? The company is

already an investor in Village Voice Media, which owns The Village Voice . Industry experts said a potential move by

Goldman represented an ideal opportunity for the company at a time when media

valuations hover near the bottom.

“Why get in now?” said Jeff Dearth, a partner with DeSilva &

Phillips, the media investment bank. “Prices have fallen to the lowest they’ve

been in awhile. If they can wrest something away, it’s a great opportunity.”

“It’s important because of its size,” Mr. Dearth said. “A billion

dollars is not something to sniff at. It represents an opportunity to create a

platform, add to it, then flip it after a period of time.”

Richard Mead, managing director of the Jordan, Edmiston Group,

another media investment bank, agreed. “I’m surprised they haven’t done it

sooner,” he said.

Through a spokesperson, Goldman declined to comment for this

story. And while the company remains tight-lipped about potential acquisitions,

one ship seems ready to be boarded: Primedia, publisher of New York and Seventeen .

The company, as of last September, currently carries $2 billion in long-term

debt and has already sold off profitable holdings like Modern Bride and Bacon’s Information Unit. Neither  Henry Kravis, of Kohlberg, Kravis, Roberts

& Co., which controls Primedia, or Primedia’s chairman and chief executive,

Tom Rogers, returned calls for comment on this story. But Reed Phillips,

managing partner with DeSilva & Phillips, put it this way: “Primedia’s the

most obvious candidate here; they have so much debt and the stock price is so

low. I think K.K.R. will be willing to sell at some point, and Goldman has the

money to make it happen.”

Goldman Sachs Discovers Print; Now It Needs a Fearless Leader