THE Growth of a Regional Magazine Company: Open Sky Media: On a Buying Binge since Early 2011, OSM Is Planning to Build a Network of Smaller Market Properties That Have Room for Multiplatform Growth
Raphael, T. J., Folio: the Magazine for Magazine Management
After the acquisition of San Antonio, Austin Monthly and Austin Monthly Home, Hadley Capital, a private equity firm specializing in acquisitions, leveraged buyouts, management buyouts, recapitalizations and add-on acquisitions, among other things, founded Open Sky Media in March 2011. That summer, Open Sky Media acquired an Oklahoma City title, Slice, and in November of that year it bought California-based Marin.
Open Sky Media (OSM) is hoping to reach its goal of having 10 to 12 regional titles in its portfolio in the next few years. As of this summer, it appears to be on its way. In early August, OSM acquired several properties from Florida-based Gulfshore Media LLC, including monthly magazines Gulfshore Life and Gulfshore Business, and annual titles like Gulfshore Life At Home, Forever Young, the Southwest Florida Guide to the Arts and several custom publications for local Florida organizations.
The opportunities for Open Sky Media will come in smaller markets within second-tier cities that give better pricing opportunities for the company. When looking to buy, OSM's parent company, Hadley Capital, looks for properties that have a revenue between $5 million and $30 million, cash flow between $1 million and $3 million, and at least one of the following assets: a proven management team; a leadership position in a niche market; a quality brand name; an established, proprietary product line; a strong regional presence.
The company is following a somewhat standard regional magazine formula with a print-first approach and a slower build out of digital. Here, FOLIO: checks in with OSM's CEO, Dick Franks, who has a background in local news and was formerly the president and CEO of American Community Newspapers. Franks explains how OMS' national advertising strategy was executed for his brands around the country, and the company's plans for the local event space that will be used to compliment his print and digital assets.
FOLIO: Describe the opportunity to acquire the Gulfshore Media properties.
Dick Franks: We had been working with several magazine publication brokers in the industry and we also let it be known through the industry grapevine that we were interested in acquiring quality properties in quality places. We had the opportunity to speak with [Gulf Shore Media president] Dan Denton a year or so ago. At that time, he had decided he really wasn't in a position to sell off the magazine, but we reestablished a contact several months ago and he said he'd like to consider things again. We were fortunate that he had other things he wanted to address so we were able to acquire the great stable of magazines there.
FOLIO: In March 2011 Open Sky Media acquired several magazines in Texas. In August of that year you acquired another in Oklahoma. What is the company's acquisition strategy--what markets are you looking to expand into and how do you identify them in terms of audience makeup, volume and/or brand revenue?
Franks: In Texas we were very fortunate and that was our first acquisition. I come from the newspaper industry and I've had the thought for sometime that ink on paper is still a very powerful medium given the right product and right places. I've been interested in the city and regional magazine business--both as a subscriber, I get a lot of magazines, and as a business person for what I think are the opportunities for print going forward.
We were able to acquire the Texas magazines because of a long-standing personal relationship I've had with the previous owner through the newspaper industry. That's how we got the first one. The second one was Austin. Oklahoma City was brought to our attention by the brokers we had that were looking around the country for us.
Our strategy is to acquire quality products in great markets. We're not after what would be considered major markets, but we like second or third-tier towns and cities that have great magazines. …