American founder sold paper into ‘good hands’ while new owner says 'best years’ are still ahead.
Mohammad Zahoor, a United Kingdom citizen who owns the ISTIL Group, has purchased the Kyiv Post in a deal valued by Dragon Capital investment bank at roughly $1.1 million.
Zahoor bought the newspaper, Ukraine’s top English-language news publication since 1995, from its founder and only owner, American Jed Sunden. Sunden announced the sale at a noon meeting on July 29to Kyiv Post staff members. Zahoor was not present.
However, in announcing the acquisition, Zahoor pledged to continue and strengthen Kyiv Post traditions of independent and investigative journalism.
“We believe that the best years of the Kyiv Post lie ahead, and we have great plans for the brand’s development, in print, on the Internet and with other media as well,” Zahoor said. “We are committed to upholding the Kyiv Post’s high standards of independent journalism, and will continue to allow the editors the freedom that they previously enjoyed. We recognize that the Kyiv Post was one of the few truly independent voices in Ukrainian media since its inception, which is why it enjoys almost unparalleled trust among its readership.”
While neither sided disclosed the purchase price, Dragon Capital estimated the deal at $1.1 million, “based on our 2009 financial projections for KP Media and current multiples at which publishing companies are traded,” according to its July 30 investment report.
Dragon Capital helped Sunden’s KP Media, the Kyiv Post’s former owner, sell 20 percent of the company’s shares in 2006, raising $11 million.
ISTIL Group is active in real estate, media, telecommunications, film production and television production, among other businesses in Ukraine and elsewhere. ISTIL stands for International Steel & Tube Industries, Ltd. The company has offices in Kyiv and was founded by Zahoor in 1991.
A native of Pakistan, Zahoor is a multi-millionaire who earned his fortune in steel production and trading in Donetsk.He sold the steel business more than a year ago – at the peak of the market, analysts say -- and has been investing into other areas, building up an impressive and diversified portfolio of assets.
Representatives of Zahoor and Sunden had been negotiating the sale intensively for the last two months and Sunden said he entertained other bids.
The sale includes both the newspaper and the Kyiv Postwebsite, whose audience has been growing dramatically since a mid-September upgrade. The newspaper currently employs 22 people in news, advertising, marketing, distribution and accounting. But Zahoor expressed interest in hiring additional staff members to expand and improve the newspaper.
While the print version of the newspaper is published every Friday, the website is now continuously updated with staff reports andstories from Reuters, Associated Press, Interfax and other news services.
The deal brings to an end a 14-year era of Kyiv Post ownership by Sunden. The newspaper started with humble origins only four years into Ukraine’s independence, with $8,000 and six employees. But its reputation as a beacon of independent journalism and its financial success grew quickly.
In announcing the sale, Sunden said that money wasn’t the only factor in selling to ISTIL Group. Sunden said that he believes that the Kyiv Post will be “in good hands” under Zahoor’s ownership.
The Kyiv Post was the first publication in Sunden’s KP Media company, which has grown to includenumerous other publications and websites. Other KP Media properties include the Russian-language Korrespondent magazine (launched in 2002) and website, BigMir (launced in 2000), Afisha andKyiv Business Directory.
But, as Dragon Capital noted in its July 30 report, the last year has been difficult for KP Media.
“The economic decline, accompanied by a sharp contraction of the domestic advertising market, forced KP Media to close all new publications it had launched after its 2006 private placement, including the metro daily 15 Minutes, Ukrainian-language women’s magazines Pani and Vona and weekly news magazine Novynar.”
Dragon Capital expects that “KP Media will likely use the sale proceeds to replenish its working capital and reduce debt burden. Given the difficult situation on the market and in the company, we do not rule out KP Media will be forced to divest its other print media, such as entertainment weekly Afisha and some joint print projects. We expect that after KP Media cleans up its print media portfolio, the only exception being its very successful Korrespondent weekly magazine, it will continue to develop its Internet business.”
Zahoor said he has “the highest respect for the people at KP Media, and wish them the best of success in the future.”