Forbes sells a stake

Elevation Partners buys minority share

August 08, 2006|By BLOOMBERG NEWS

NEW YORK -- The Forbes family has sold a minority stake in its magazine and Web site businesses to Elevation Partners LP, the buyout firm whose partners include U2 lead singer Bono. Terms weren't disclosed.

Elevation Partners invested in newly created Forbes Media LLC, the publisher of Forbes magazine and, the New York-based company said in a statement yesterday.

"I like our chances here," Roger McNamee, a co-founder of Elevation Partners, said in a phone interview. "Trust and authoritative content are the keys to be a successful investor in this industry and Forbes has both."

Forbes Inc., founded in 1917 by Scottish immigrant B.C Forbes, has been selling some family assets, including a collection of Faberge eggs in recent years. Advertising pages at its flagship business magazine have slumped by almost half since 2000.

Steve Forbes, 59, who spent more than $70 million on two unsuccessful runs for the U.S. presidential election, took over as chief executive officer after his father Malcolm died in 1990.

The investment gives Menlo Park, Calif.-based Elevation a stake of more than 40 percent in Forbes Media at a cost of $250 million to $300 million, The New York Times reported yesterday, citing unidentified sources. Forbes spokeswoman Laurie Baker declined to comment.

Forbes, which has a circulation of 900,000, had been investing in its Web site to help lure online advertisers and eventually sell shares in an initial public offering of the unit. The IPO never happened as Internet stocks tanked in 2000 and 2001.

The site's traffic more than doubled from last year and revenue is rising more than 50 percent annually, Steve Forbes said in an e-mail to employees today.

"We have been pursing a partnering strategy for some years and Elevation is the right partner at the right time to accelerate our growth," he wrote.

Forbes will replace the company's stock incentive plans for magazine and Web site employees with one that "will allow you to have a real monetary participation in Forbes' future," he said in the e-mail.

Ad pages at Forbes declined 10 percent last year to 3,069, according to figures by the Publishers Information Bureau. That's down from 6,083 in 2000, when Forbes and rivals including Time Warner Inc. benefited from advertising spending by Internet startups.

Elevation Partners raised a $1.9 billion buyout fund in August 2005 and has since invested in companies including Homestore Inc., a U.S. online home-listings company. The firm was co-founded by McNamee, also a co-founder of technology buyout firm Silver Lake Partners, and Fred Anderson, Apple Computer Inc.'s former chief financial officer.

JP Morgan Securities acted as sole adviser to Forbes.

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