Bath-based publishing group Future has sold its Music Division in New York to NewBay Media for $3m (£1.96m). The sale includes US magazines Guitar World, Revolver and Guitar Aficionado and the related websites together with a licence to operate the Golden Gods Awards show in the US. It follows the group's £19.3m annual loss last year as a result of a poor performance by its US printed magazines and is part of a strategy to reduce the scale of exposure to the US.
The deal involves a cash payment of $2.6m (£1.7m) in cash on completion; $150,000 (£98,000) in cash on September 30; and $250,000 (£163,000) in cash in the third calendar quarter of 2012 based on achievement of certain operational targets. In addition, NewBay will assume all subscription liabilities relating to the titles. The net sale proceeds will be used for the continued restructuring of Future US and to reduce the level of bank debt. The sale will be made on a cash and debt-free basis.
After completion of the sale, there will be a short transition period during which Future US will continue to support NewBay while the new owner integrates the US Music Division into its portfolio. Once this is over, Future will sell its New York property.
Revenue and pre-tax losses attributable to the US Music Division in the year to September 30 was £8.5m and £3.8m, respectively. The business had gross assets of £1.8m.
Future's chief executive, Mark Wood, said: "The sale represents a big step forward in our strategy to streamline our US business and return it to profitability by 2013. The merger of our mainstream US operations and our UK business is on track, and we are making good progress in reducing costs.
"We continue to accelerate our transition to a digital business model and to create a single global product line, selling our entire range of digital content to high-value audiences in all key markets."
Founded in 1985 with one magazine, Future now has operations in the UK, US and Australia with 200 special-interest publications, apps, websites and events. It sells 2.9m magazines each month and attracts more than 34m monthly unique visitors to its websites and delivers more than 100 digital editions and bespoke apps on tablet. Future exports or syndicates publications to 89 countries, making it the UK's number one exporter and licensor of magazine content. It was Consumer Digital Publisher of the Year at the Association of Online Publishers Awards 2011.
