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SkyMall Sold to Investor Group

Private Equity Online, 12.05.05

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.