Money-draining magazine publisher Primedia sacks CEO Rogers

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Primedia Inc., the money-losing publisher of magazines such as Seventeen and New York, ousted Chief Executive Tom Rogers because of “differences” with its Kohlberg Kravis Roberts & Co.-controlled board.

Charles McCurdy, 47, a Primedia founder and its former president, was named interim CEO. Dean Nelson, 44, head of an independent consulting firm that has worked with Primedia to pare costs, becomes interim chairman, the company said in a statement.

Primedia shares plunged 79 percent during the 48-year-old Rogers’s tenure as CEO, which began in 1999. Rogers, a founder of the CNBC financial-news channel, engineered Primedia’s $426 million purchase of Web company About.com Inc. two years ago, just as the value of online companies plummeted and demand for magazine advertising waned, analysts said.

“He made a lot of bets at the top of the cycle,” said Morgan Stanley analyst Doug Arthur, who has an “underweight” rating on the shares and doesn’t own any Primedia stock. “Primedia is a major investment by KKR and the stock is at $2. What’s the mystery?”

KKR has lost about $1.29 billion in its Primedia investment since Rogers joined the company. Primedia’s market valuation is $752 million, compared with $2.45 billion at the end of 1999.

Primedia said Rogers is leaving “based on differences regarding the future direction of the company.” The publisher declined to elaborate. KKR spokeswoman Molly Morse declined to comment on the reasons for Rogers’s departure.

Primedia spokesman Elliot Sloane said Rogers was declining comment. Rogers couldn’t immediately be reached for comment at his office.

Internet bets

Rogers, who spent 12 years at General Electric Co.’s NBC and said he learned his management style from former General Electic Co. CEO Jack Welch, planned to transform Primedia into a “new media” company when he joined.

“When Tom Rogers was hired in late 1999, KKR was very impatient because they didn’t think Primedia was responding to the Internet challenge aggressively enough,” said Morgan Stanley’s Arthur.

At the start of his tenure, Rogers said he was mulling selling shares in one or more of its Internet businesses. Instead, he bought About.com.

The purchase came as Internet stocks such as Yahoo! Inc. and Amazon.com Inc. were tumbling on investor concern about slowing revenue growth and widening losses. About.com lost $66 million in 2000, compared with $55 million in the previous year.

“He probably paid too much because he got it when the Internet valuations were higher than currently,” said Joseph Stocke, chief investment officer at Stoneridge Investment Partners, which owns about 790,000 Primedia shares in its $500 million portfolio.

The New York-based company in the past year has whittled its magazine portfolio, selling titles such as Modern Bride and American Baby, to pay debt. Concerns about the company’s debt load caused the stock to decline, analysts said.

Rogers in February said the company was seeking a buyer for Seventeen magazine, the largest U.S. teen monthly, or entering into a joint venture to run it. The publication could fetch $160 million to $180 million, Merrill Lynch analyst Karl Choi has said.

Primedia’s debt, which stood at $2 billion last year, rose after the New York-based company bought Emap Plc’s U.S. magazine unit in August 2001 to gain publications such as Motor Trend.

Four of Primedia’s 12 directors are KKR executives. KKR, a private-equity firm, is Primedia’s majority shareholder, with about 60 percent of the stock.

KKR started Primedia in 1989 when it bought the direct marketing and trade magazine business of Macmillan for $320 million, said KKR spokeswoman Morse. The private equity firm two years ago said it had spent $4 billion to acquire media assets for Primedia, she said.