The Business
A diving-and-travel quarterly with a circulation of 40,000, half of that from newsstand sales. Overlooking the shimmering Pacific, the 10-year-old publication is produced by three full-timers and dozens of freelance photojournalists. More than 75% of revenues come from advertisements, which occupy 37% of the magazine's pages; 400 advertisers promote everything from resorts to scuba gear. The 9,000 paid subscribers make up 11% of revenues, with newsstand business accounting for another 4%, and a trickle of dollars coming from the 2,500 copies sent to diving shops. The seller wants more freedom to pursue lifestyle goals.

Financial Summary 1991 1992 1993*
Gross revenues $310,700 $694,600 $324,100
Recast earnings before depreciation, interest, taxes, and owner compensation $41,800 $146,900 $106,000 *estimated

Price $500,000 ($350,000 down, $150,000 note to seller)

Outlook U.S. magazine-ad revenues are on the rebound. From January to June 1994, they rose 9.7% over the same period last year, with ad dollars for travel and resort periodicals decompressing at an even faster clip. The domestic sport-diving market, which has been growing 15% to 20% annually, now reaches a wet-suit crowd of 6.5 million, and each year, 700,000 are certified. Industry watchers say monthly demand for diving mags is 520,000 copies. Thing is, five other competitors already ship more than 500,000. So to lure more divers, the owner floated a successful (if costly) direct-mail campaign. By the way, sunken '93 revenues shouldn't flag a trend; ascribe them to careless bookkeeping.

Price Rationale The publication's depreciables -- Macintosh computers, furniture, and other publishing paraphernalia -- might fetch $22,000 on a good day. The real value is in the soft assets: the copyright, mailing list, seasoned office manager, dedicated (but independent) ad-sales reps. Experts say if you use a multiple of three to four times 1992 earnings -- provided the magazine keeps spinning off cash -- the price, which has already been slashed once, is not unreasonable.

Pros You'll spend 40% of your time diving off the Virgin Islands, Fiji, Belize, and Cozumel in search of stories -- and advertisers. You might become the next Cousteau . . .

Cons or a snack for a great white. Also, we're talking specialty publications here; Travel & Leisure this ain't.

-- Karen E. Carney

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of the financial or other information offered by the seller. Inquiries should be directed to Business Team Inc., 408-246-1102. n