NEW YORK -- Two of the nation's best-known tabloids -- the National Enquirer and Star -- are part of a struggling publishing empire being acquired for $300 million by a New York investment firm headed by former Deputy Treasury Secretary Roger Altman.
American Media Inc., the Florida-based publisher that has suffered from slipping newsstand sales, is being purchased by Evercore Partners, which also is assuming $470 million in debt under the deal announced late Tuesday.
"There is a terrific opportunity to build on the strength of these brands," said Austin Beutner, a principal with Evercore. The National Enquirer and Star "are probably two of the most under-marketed and under-promoted papers in the country."
David Pecker, chief executive of Hachette Filipacchi Magazines, which publishes George, Elle and Mirabella magazines, has been hired as chairman and chief executive of American Media, which keeps its name in the transaction.
Pecker is planning a $50 million marketing campaign, to boost newspaper sales. The popular tabloids also may be expanded to include teen and Spanish language versions and television programming.
But the new owners of American Media face the daunting task of trying to build a company known for peddling gossip at a time when the Clinton-Monica Lewinsky scandal has left many Americans turned off.
"If well over two-thirds of the American public wanted just to end the entire Clinton-Lewinsky saga ... what that's saying is maybe the public's appetite for gossip and sexual peccadilloes of celebrities may have ebbed," said Jack Cox, president of the Foundation for American Communications, a Los Angeles-based journalism think tank.
American Media, which also prints Country Weekly and Weekly World News, said last week it would stop publishing Soap Opera News and Soap Opera Magazine, and would sell certain assets and trademarks to Primedia Inc.
American Media has been hurt by distribution problems and lackluster sales -- exacerbated by a drop in circulation after the death of Princess Diana, whose every move was dogged by tabloids.
The National Enquirer's circulation has dipped to 2.24 million at the end of last year from 2.72 million in June 1997. At the same time, The Star's circulation fell to 1.82 million from 2.22 million.
Last month, the company reported that profits for the first nine months of its fiscal year dropped 92 percent to $569,000 from $6.8 million a year earlier.
American Media's stock rose 37 1/2 cents to $6.56 1/4 Tuesday on the New York Stock Exchange.
Evercore's offer of $7 a share, announced after the market closed, represents a 6.6 percent premium. Boston Ventures Ltd., which owns 70 percent of American Media, has agreed to the sale.
While Pecker clearly has his work cut out, he has a solid reputation in the publishing world. During his seven years as chief executive of Hachette, the company's sales doubled.
"There are very few brands that combine the high profile and high circulation levels of the Enquirer and Star," Pecker said in a statement. "We feel these publications can be positioned for future growth on both the advertising and circulation fronts."
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