The sale of the US Music Division is consistent with the strategy set out at the time of the preliminary results to reduce the scale of exposure to the US, says Future. The sale involves the US magazines Guitar World, Revolver and Guitar Aficionado and the related websites together with a licence to operate the Golden Gods Awards show in the US.
The gross consideration is payable as follows: $2.60 million in cash on completion; $0.15 million in cash on 30 September 2012; and $0.25 million in cash in the third calendar quarter of 2012 based on achievement of certain operational targets. In addition, NewBay will assume all subscription liabilities relating to the titles. The net sale proceeds will be used for the continued restructuring of Future US and to reduce the level of bank debt. The sale will be made on a cash- and debt-free basis.
Post completion of the sale, there will be a short transition period during which Future US will continue to support NewBay while NewBay integrates the US Music Division into its portfolio. Once this period is over, Future will market its New York property.
For the year ended 30 September 2011, the revenue and pre-tax loss attributable to the US Music Division was £8.5 million and £3.8 million, respectively. At 30 September 2011, the US Music Division had gross assets of £1.8 million.
Mark Wood (pictured), Future's Chief Executive, said: "The sale represents a big step forward in our strategy to streamline our US business and return it to profitability by 2013. The merger of our mainstream US operations and our UK business is on track, and we are making good progress in reducing costs.
"We continue to accelerate our transition to a digital business model and to create a single global product line, selling our entire range of digital content to high-value audiences in all key markets."
