Maxim Sale Is in Big Trouble

Darden Media Group had multiplatform plans for laddie brand

Alpha Media Group’s sale of Maxim appears to be headed for the rocks, knowledgeable sources told Adweek.

Cerberus Capital Management-controlled Alpha officially put the laddie magazine on the market in March. In September, it announced that it had found a buyer in Darden Media Group, a new company headed by retired UPS svp Calvin Darden. The deal was expected to close in the third quarter or early fourth quarter, but that deadline has come and gone, and the sources said they've been told the deal is off.

The deal had already raised some eyebrows back when it was announced. While Darden personally has an impressive resumé, he’s a newcomer to publishing. He's a director of Target Corp. and the Coca-Cola Co. as well as being chairman and CEO of Darden Development Group, a real estate development company. He was named by Fortune as one of the 50 most powerful black executives in corporate America. Despite his lack of publishing background, Darden said he had “definitely done my homework,” The Wall Street Journal quoted him as saying.

However, the announcement made no mention of Darden’s son, Calvin Darden Jr., who was convicted eight years ago of stealing from securities firms and investors including former NBA star Latrell Sprewell while a stockbroker. Sources close to the company said they were surprised to learn that the younger Darden was involved in the Maxim deal, though, attending meetings and fundraising.

Terms of the deal weren’t disclosed, but people with knowledge of the sale process said the price paid was in the neighborhood of $30 million. There were other would-be buyers who had expressed interest. But if Darden backs out, it may be hard for the buyer to be able to match the original price.

Observers have long been skeptical about the value of Maxim itself. Maxim’s declining advertising and circulation and Darden’s plans to expand the brand to TV, radio and music platforms notwithstanding, Maxim remains a print-driven business, and keeping that going will require substantial investment. The 2 million-circulation monthly magazine would come with subscription liabilities—the cost to fulfill multi-year subscriptions that have already been paid for—which could run as high as $30 million.

In another red flag about the business, 5 percent of Maxim’s average paid circulation as of June 30 was in the form of post-expiration copies. Those are issues that are delivered to people even though their subscriptions had run out and which can signal that a magazine is having problems making its circulation promise to advertisers.

Cerberus, through PR firm Weber Shandwick, declined comment. Maxim president Ben Madden also declined to comment. Multiple calls to Houlihan Lokey, which Alpha hired as a financial advisor; and Goodman Media, which announced the sale, weren’t returned Wednesday.