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Sources suggest Disney will sell publications division

Fairchild Publications has numerous magazines and trade publications. Disney wants to focus on its studio and theme park divisions.

In a move to focus on its studio and theme park divisions, Walt Disney Co. has decided to sell Fairchild Publications, the magazine division that includes W, Women's Wear Daily, Los Angeles and Jane magazines as well as many trade publications, executives involved in the deal said Thursday.

According to a Disney executive, there are two bidders for the titles: the rival magazine publishers Conde Nast Publications and Hearst Magazines. They have been making offers and countering each other for three months, the executive said.

The chairman of Conde Nast, S.I. Newhouse Jr., has offered $650-million for the Fairchild group, said the Disney executive, who also noted that a team of Hearst accountants had been working on the deal with particular zeal for the last two weeks.

Conde Nast is the publisher of Vogue, Allure and Glamour, among other titles; Hearst publishes Harper's Bazaar and Town & Country.

Disney has wrestled with the issue of whether or not to sell Fairchild since 1995, when Disney _ which has never been a traditional magazine publisher _ acquired Capital Cities/ABC, then the longtime parent company of Fairchild Publications. In 1997, Disney even announced a decision to sell the division, then retracted it a week later.

But Disney has been under pressure recently from Wall Street to sell non-strategic assets and revive its core business.

The company has already sold some non-core assets acquired in the Capital Cities deal. In April 1997, Disney sold four newspapers, including the Kansas City Star and the Fort Worth Star-Telegram, that it had acquired in the deal to Knight-Ridder for $1.65-billion. Also in 1997, Disney sold the trade publisher Chilton to the British-Dutch company Reed Elsevier for $447-million and Institutional Investor Inc. to Euromoney Publications for $142-million.

And on Thursday, the Los Angeles Times reported that there were rumors that Disney was considering a sale of its Anaheim Angels baseball team and its Anaheim Mighty Ducks hockey team.

Fairchild Publications, in addition to its mainstream titles, also has a stable of trade magazines, including Women's Wear Daily, Supermarket News, Brand Technology, Footwear News and Children's Business. It is not clear how Conde Nast or Hearst would use these titles if either company acquired them.

The jewel of the acquisition for either Hearst or Conde Nast would be W magazine, an oversized glossy fashion monthly that has evolved from a narrow trade title to a mainstream general-interest magazine over the last four years, passing the Hearst-owned Harper's Bazaar in advertising pages and revenue in 1998 by a huge margin.

W has taken apparel advertising from magazines at both Hearst and Conde Nast, advertising revenue that both companies would prefer to have on their own bottom line. In 1998, W had 2,005 advertising pages, while Harper's Bazaar had only 1,542. Vogue, which is owned by Conde Nast, led the field with 2,681 pages of advertising last year; in second place was Elle, with 2,068 pages.

In 1994, W generated $33.5-million in advertising revenue for Fairchild, according to the Publishers Information Bureau, but by 1998 that figure had increased to $87.6-million.

Hearst Magazines clearly wants to make the acquisition, said an executive involved in the negotiations. The magazine division recently announced that Sports Afield and Motor Boating & Sailing are for sale because the company is shifting toward less niche-oriented and more popular titles. It has recently announced a deal to publish Oprah, a lifestyle magazine with Oprah Winfrey as brand spokeswoman. Hearst Magazines also partnered earlier this year with a division of Disney, Miramax Films, to publish Talk, the magazine edited by Tina Brown. The first issue arrived on newsstands last week.

David Londoner, an analyst at Schroder Securities who follows Disney, said the sale made sense because Fairchild does not fit in with Disney's corporate strategy.

"And virtually everything Disney does reinforces everything else they do," he said. "And Fairchild is kind of out in left field."

Londoner said that because Disney's earnings are down, "the company is refocusing, and will undoubtedly go through some organizational changes over the next year or so. This could well be part of it." Disney stock for the year to date has fallen 12.9 percent.

Hearst already has several affiliations with Disney. Hearst's television stations are ABC affiliates, and it owns 20 percent of ESPN, of which ABC owns the balance. Hearst also owns a small piece of ESPN magazine.

And ABC and Hearst are investors in two cable services: Lifetime and Arts and Entertainment. Hearst Corp.'s chief financial officer, Ronald Doerfler, was formerly the chief financial officer of Capital Cities and is intimately acquainted with the Fairchild properties.

Chris Castro, a spokeswoman for Disney, and Deborah Shriver, a spokeswoman for Hearst, had no comment. Michael Coady, the president and chief executive of Fairchild Publications, did not return phone calls seeking comment.

Steven Florio, the chief executive of Conde Nast, did not return phone calls, but Maurie Perl, a spokeswoman for Conde Nast, said: "We have no comment on acquisitions."

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