SkyMall Sold to Investor Group

Private Equity Online 12.05.2005

 

New York-based ZelnickMedia Corp. has teamed up with Spire Capital and Greenspun 

Media Group to acquire SkyMall, which publishes an in-flight product catalog found 

in the seat pockets of commercial airliners.  The acquisition gives SkyMall, previously 

owned by Gemstar-TV Guide, an enterprise value of $52 million.

Based in Phoenix, Arizona, SkyMall boasts an annual catalog circulation of roughly

20 million.  The company also operates a web site, skymall.com, and runs a loyalty

marketing program that serves frequent fliers.

Jim Friedlich, a partner at ZelnickMedia, described the product offering of SkyMall as 

fitting between "the quirky and the utilitarian".

"There's stuff in there you can't live without and stuff that you wouldn't even know

existed before opening up the catalog," he added.

The company's Web site displays products ranging from digital scales and pet gates to 

talking bottle openers and golf-bag beverage pumps.

According to the terms of the deal, $9 million of the $52 million purchase price went 

toward working capital.  Gemstar-TV Guide assumed roughly $4 million of SkyMall 

liabilities and retained approximately $12 million of SkyMall cash and cash

equivalents.  Harris NA arranged the debt financing for the investors, although no 

details regarding the makeup of the deal's capital structure could be disclosed.

The investor group brings together two media specialists in ZelnickMedia and Spire.

The former, which sourced the deal after a roughly three-year courtship, has targeted

the direct marketing space before through acquisitions of Lillian Vernon Corp. and Time

Life, Inc. (In partnership with Ripplewood Holdings).  Lillian Vernon, coincidently, is a 

merchant retail partner of SkyMall, and sells select products through the company's

catalogs.

Spire, meanwhile, is a New York-based buyout group, with past investments 

encompassing the publishing, radio and cable television markets, among other media-

related industries.  Spire also brought in Greenspun, which is a Nevada magazine

and newspaper publisher, best known for magazine titles such as ShowBiz Weekly

and Las Vegas Life.

Goldsmith Agio & Helms advised Gemstar-TV Guide on the sale, while Hogan Hartson

provided legal advice to the sellers.  ZelnickMedia was represented by Proskauer

Rose, and Sonnenschein Nath & Rosenthal served as counsel to Spire.