Hearst Makes Blockbuster Offer for Lagardère's Mags

Hearst has offered to pay about $890 million for Lagardère’s international publications -- far more than the $1 that had become the going price for iconic, yet faltering, magazine brands. The price represents about 13 times earnings before interest, taxes (EBIT) close to the high point of multiples paid for magazines just before the recession, estimated Reed Phillips, managing partner of media investment bank DeSilva & Phillips. The price offered reflects Hearst’s belief that it can improve the properties through cost-cutting, however. In the US, the deal would include Lagardère’s unit Hachette Filipacchi Media, publisher of Elle, Woman’s Day and Car & Driver. Hearst -- parent of Cosmopolitan, Esquire and other titles -- would add over 100 international magazines for a total of more than 300 overseas editions. The deal would make Hearst the No. 2 publisher in the US in terms of ad pages and, it’s believed, the biggest international publisher by number of editions. The sale is expected to close in the third quarter of 2011.