Private equity firm KKR invests $50 million in Next Issue Media
The Wall Street Journal today reported that the private equity firm Kohlberg Kravis Roberts & Co. (KKR) has a invested $50 million in Next Issue Media, the joint venture of Time Inc., Condé Nast, Hearst, Meredith, News Corp, and Rogers Communications (which joined the group earlier this year to launch the Canadian version of Next Issue).
The funding will be used to expand the digital newsstand’s marketing efforts. Next Issue offers a Netflix-like subscription service which allows readers to read a portfolio of magazine titles for one monthly rate of $9.99 (or $14.99 for a slightly larger group of magazines that includes weekly magazines such as TIME).
KKR will end up with a minority stake in the company, but as anyone who has worked for a private equity owned media firm will attest, the clock is now ticking. PE firms generally only own their investments for around five years, and never invest more money into the companies without taking a bigger stake, of course.
As Next Issue Media is not a public company, it does not have to share its financials and so one does not know what kind of shape the company is in. That it would seek PE funding is an interesting (and to me, troubling) move.
In any case, Next Issue Media, if it is more aggressively promoted, will end up being both a greater source of revenue for its media partners, as well as stronger competition for subscribers.
Despite this, Next Issue Media is proving to be a driver of paid circulation which publishers can use to maintain those rate bases. Readers derived from Next Issue subscriptions are reported on the audits and publisher’s statements of the individual magazines as “paid single copy sales sales based on the consumer payment for the program and the consumer’s request for the specific magazine.” WIRED magazine, for instance, recorded 23,495 copies in its last publisher’s statement (it had 25,864 in total), while Cosmopolitan recorded 19,648 (out of a total of 30,157).