What caused the much-hyped breakdown of David Pecker’s American Media Inc. acquisition of Jann Wenner’s Us Weekly? Neither side is saying a word (probably because of confidentiality provisions during the negotiations) — but just about everyone in the publishing industry this week is quietly whispering about the sudden collapse.
Does Wenner have another offer? (Unlikely.) Or did Pecker walk after discovering Wenner’s business isn’t able to be rescued in these troubled times? All are plausible theories — but the facts reveal Us simply isn’t what it once used to be in its heyday under Bonnie Fuller. Ironically, Pecker raided from Fuller from Wenner in 2003 — and thus ignited 14 years of bad blood between the two mercurial media moguls.
But while Wenner fiddled and watched his empire burn, Pecker kept rebuilding AMI into “the little company that could.”
And now the reality: According to the Alliance for Audited Media, Wenner’s newsstand sales plummeted as low as 153,561 and averaged 199,991 during June 30 to December 31 last year. More troubling, between 2015 and 2016, Us was down a staggering 34% — more than any other competitor in the celebrity category.
“This is a brand that sold more than one-and-a-half million single issue copies in its heyday,” says one industry watcher. “Jann Wenner still treats Us as if it were the halcyon days of publishing. Big budgets. Bloated staff. Huge expense accounts. But the harsh financial reality is that it just isn’t delivering — at the newsstand, in advertising revenue and digital, where it is far behind others in the industry.”
Us is estimated to have rung up revenue of about $217 million last financial year — but profit was a mere $15 million. Speculation on Wall Street is that AMI offered a tantalizing all-cash deal that would have saved Wenner’s backside — he’s said to be $60 million in debt.
But then something went seriously wrong. “Pecker and his lieutenants would have saved Us Weekly from an inevitable death — but I guess even they thought this one was beyond being saved.”
Meantime, Wenner Media is suffering. They are reeling from losing their Rolling Stone defamation case about the University of Virginia non-rape. And Wenner recently sold a 49% stake in the company to the Chinese after turning over Rolling Stone to his 26 year old son.
I’m told that before AMI did their due diligence they were ready to offer “more than $90 million” to Wenner. Now the deal is off, AMI will move on, and Us Weekly teeters.
