NEW YORK, June 1 /PRNewswire/ -- Princeton Media Group Inc. (PMG) (Nasdaq: PMGIF - news), publisher of Oui Magazine, Gent and 21 other adult entertainment and lifestyle magazines, said today it signed letters of intent to acquire a major adult entertainment dial-in telephone service and a leading Internet interactive adult entertainment provider as part of its corporate strategy to consolidate major elements of the telephone, print and Internet adult entertainment businesses. Terms weren't disclosed.
PMG said it has a commitment from an investment banking firm to assist the Company in obtaining approximately $50 million in financing to complete these and other acquisitions.
PMG said the identities of the leading adult telephone dial-in service and the Internet provider of adult entertainment viewing rooms can't be disclosed at this time under the preliminary agreements. PMG said, however, that the telephone dial-in company's annual sales are approximately $17 million with about $4.5 million in EBITDA, and that sales are growing at about 40 percent annually. The Company said the Internet adult entertainment provider's sales are about $400,000 a month with $200,000 of that in EBITDA, and growth in sales of about 100 percent annually. On a pro forma basis, assuming these acquisitions are consummated, PMG said the combined companies, including PMG, would post sales of about $37.5 million annually, compared with PMG's 1997 revenue of $15.7 million.
The Company also reported that it consummated a five-year licensing agreement with Persian Kitty's Adult Links (www.persiankitty.com), the single most popular Internet directory of adult sites, which an average 550,000 visitors per day. As part of the agreement PMG will publish Persian Kitty magazine, while Persian Kitty will feature an Electronic Newsstand to promote and sell PMG titles exclusively. The agreement gives PMG an audience of some 16.5 million monthly web surfers, facilitating PMG's cross-promotion among print, telephone and Internet media. The agreement was signed with Meow Media Inc. (MMI) and Lew Payne Publishing Inc. (LPPI), producers and publishers, respectively.
In the same agreement, the company entered into a five-year development and publishing arrangement with LPPI, providing for LPPI to create, publish and manage Internet versions of all PMG adult magazines. These membership websites will also market adult entertainment merchandise and link back to the Persian Kitty Electronic Newsstand. LPPI's expertise in Internet publishing will enable PMG to quickly establish a successful online presence. PMG and LPPI will share revenue from the co-operative ventures.
Hugo Barreca, PMG's chief financial officer who previously served in senior positions with Time Inc., the New York Times Magazine Group and Gruner + Jahr USA Publishing, explained that ``the adult entertainment business historically has been the early major driver and first to profit from new technologies,'' citing the early days of the VCR, 900 telephone numbers and now the Internet. He said, ``While many commercial ventures are struggling for profitability on the Internet, the adult entertainment-related Internet business already is a huge success, generating an estimated $1 billion-plus in revenue annually.''
PMG Group Publisher Wendi Tush, a former journalist and producer with companies including Reuters New Media, CNN and VH-1, said, ``Persian Kitty is the most visible and popular link to adult websites on the Internet. PMG's licensing agreement with Persian Kitty assures that PMG's well-established print brands will immediately gain an important presence and following online. This, combined with our co-venture with LPPI and the pending acquisitions, will give PMG a leading position in the multimedia adult entertainment market.''
Norman Raben, PMG's chief operating officer who was co-founder, president and chief executive officer of Inc. Magazine, said, ``We believe we can benefit from enormous cross-selling opportunities as well as potentially large revenues from targeted advertising by becoming the major company in our field through the combination of our magazines, telephone and Internet adult entertainment businesses. These acquisitions are just a few of the opportunities we now are pursuing.''
Raben said, ``We have put together a highly sophisticated management team of executives from publishing and the media to take advantage of what we see as an enormous consolidation opportunity. The companies we expect to acquire under the agreements announced today have been leaders in the incredible growth of new distribution media for adult information, advertising and sales.''
Under the executed Persian Kitty agreement, PMG will establish Persian Kitty magazine, which will be published quarterly and sold on newsstands as well as on the Internet. The publication will enable readers to ``tour'' through select adult sites featured on the Persian Kitty website, offering them photographs, exclusive interviews and access to restricted online areas. LPPI will publish the Internet Electronic Newsstand, with MMI licensing it for use on the Persian Kitty website. The newsstand will also promote PMG adult-sophisticate titles, enabling an already established base of 16.5 million monthly visitors to sample, subscribe to and purchase PMG material online.
Princeton Media Group publishes 23 lifestyle and niche-market magazines for specialized interests. The Company maintains headquarters in Palm Beach, Florida, and has a 70,000 square foot printing plant in Wisconsin and corporate-editorial offices in Miami and New York City.
Caution: Certain statements contained in this press release regarding the Company's future prospects of profitability constitute forward-looking statements and as such must be considered with caution and with the understanding that various factors could cause actual results to differ materially from those described in such forward-looking statements. Such factors include but are not limited to changes in revenues from distribution, advertising and subscriptions, changes in costs of materials and operations, and failure of pending or anticipated acquisitions to be consummated.
SOURCE: Princeton Media Group Inc.