A source tells Bloomberg Businessweek that Prometheus Global Media, which owns the Reporter, Adweek, Billboard, and other trade magazines, is on track to lose as much as $10 million a year. "Nonsense," says Prometheus owner Richard "Mad Dog" Beckman. "We were profitable in 2010, and profits will increase in 2011." Then again, investment returns might be beside the point:
Neil Stiles, president of Variety Inc., says he can't make Beckman's math work but also wonders if Prometheus might have less immediate motivations than turning a profit on its magazines. "What they're clearly about is asset value, not P&L," Stiles says. "That's the stunning thing about private equity. You don't actually have to make a profit, you just have to look like you might one day, and then you sell to another private equity firm. It's sort of like a Pass the Parcel game at a children's birthday party, but instead of passing a nice present, you're passing an explosive device. The last private equity firm ends up getting their face blown off."
By the way, Beckman has denied a report in the NY Post that Prometheus investors are looking for the exits. Who could the source for that be? "I have no idea," he told the magazine, "but I'd love to wring their neck if I could find out."