After Paul Allen's Vulcan Ventures and other suitors balked at the $200 million asking price, Robert Miller decided to take down the "for sale" sign and hang onto Vibe, Spin and Blaze.
Miller, the chairman and CEO of the Miller Publishing Group that owns the magazines now, says that Freeman Spogli the venture capital partner that had pushed for the sale in the first place is committed to making a major Internet investment into the three titles.
Miller declined to comment on specific bidders. "At the end of the day, there was not an offer that was compelling enough for any of the owners to give up ownership," said Miller.
The most serious hope for a deal was Paul Allen's Vulcan Ventures, which recently paid $100 million for The Sporting News, a weekly magazine and Web site that lost $6.9 million in 1999. In that deal, Vulcan had to up the ante because another Internet player Richard Nanula's Broadband Sports Inc. was also in the hunt and ended up as the underbidder.
Unlike The Sporting News, which had a strong Web presence, the Miller Publishing sites have only embryonic Internet presences to dangle before suitors.
Vulcan walked away from the action last week without coming up with the $200 million.
The line-up of tire kickers for Vibe/Spin at one time included Time Inc., which hoped to hook it up with Entertainment Weekly; Viacom, which could have coupled it with MTV and Nickelodeon Magazine; Essence Communications, which was looking for a joint venture partner in order to add the music titles to Essence and Latina; Vanguarde Media in conjunction with BET Holdings, owners of Black Entertainment Television and Heart & Soul magazine; and Jann Wenner, owner of Rolling Stone and US Weekly.
As reported by The Post, most had dropped out. By the end, only Vanguarde, headed by former Vibe president Keith Clinkscales and Vulcan, were still in the hunt.
Miller apparently did not even bother to tell his former protege Clinkscales that the auction was ending without picking a buyer. Reached for comment on the development yesteday, Clinkscales said, "I don't know anything about it."
Vibe, Spin and Blaze combined had a profit of about $7 million last year, sources said. Miller was basing his asking price on projected profit of about $10 million for the current year. He had reportedly been encouraged to put the titles on the block shortly after Fairchild was sold to the Newhouse empire at $650 million, or around 24 times its earnings.
The more traditional multiple of earnings for premium publishing properties is 15 times cash flow. That should have given the music titles a price somewhere between $105 million and $150 million.
A spirited bidding war could have caused it to rise some.
But heated bidding never erupted, even after Vulcan Ventures came calling fairly late in the game.
Yesterday, Miller said Freeman Spogli was committed to developing Internet platforms for the magazines.
But he concedes he is still "two to three months away" from implementing that plan and that he might need another venture partner in the mix.
"It will require multiple millions of dollars," Miller said. "Are we talking about a $10 million initiative or a $30 million initiative I don't know. Once we have determined that, it is a question of do we want to bring in a partner to help us in that regard."