03-31-08 | Printable Version

Newspaper Distribution Key to Magazines' Success

Publishing Group of America, better known by its publications American Profile, Relish and soon to be launched Spry, owes much of its success to the audience it reaches via newspaper distribution.

The seven-year-old company launched American Profile in 2000 and has grown its weekly distribution to nine million through newspaper distribution.  Its popular food magazine, Relish, was launched in 2006 and reaches an impressive 12 million households via newspapers. Most recently, the company announced the fall launch of a new health magazine called Spry which is set to reach nine million newspaper households.

This reach compares to approximately 33 million households reached by the Sunday Parade Magazine and 23 million households reached by USA Weekend. Both Parade and USA Weekend reach households in predominately larger markets than those reached by PGA.

PGA’s success was monetized in the recently completed sale of the company to Bain Capital Ventures and Shamrock Capital Growth Fund.

The $140 million purchase price represented 12.7 times 2007 EBITDA and 7.4 times projected 2008 EBITDA.

The company’s business model centers on the value of small market newspaper readers to national advertisers.

Almost all the homes the PGA publications reach are in smaller and rural markets referred to by advertising buyers as C&D counties, otherwise difficult markets for national advertisers to reach broadly.

Advertising generates the vast majority of the company’s revenue. The local newspapers that carry the publications pay a subscription fee, but those fees represent less than 10% of total revenue. The company is currently testing even more targeted niche products, such as country music themed magazines and state targeted publications, which could also be predominately carried by newspapers.