FORTUNE — As Fortune reported earlier Wednesday, Time Warner is in talks to sell most of its magazine assets to Meredith Corp. The deal could be valued at around $2.5 billion, according to several reports. But here’s the thing: Meredith (MDP) only has a market cap of approximately $1.7 billion, and an enterprise value that’s just a hair above $2 billion.
In other words, Meredith can’t afford the Time titles alone. (Fortune, which is owned by Time Inc., would remain with Time Warner (TWX) under this deal.)
What this most likely means is that Meredith is working with a private equity firm to help finance the deal, or possibly a wealthy family office. Multiple banking sources have heard the same thing, although no one shared a specific name.
Plenty of large private equity firms have media practices, although print plays have been extraordinarily rare (and consumer magazine plays virtually unheard of). The few deals we have seen were in the business-to-business space, such as the Canon Communications roll-up or Seguin Partners buying CFO magazine from The Economist Group.
“If you’re going to buy a magazine, I guess People is the one you would want,” says a media-focused private equity investor who is not involved in the Meredith deal. “But we don’t believe the secular trends of declining newsstand sales and print advertising are title-specific.
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