lamag/12"/mike1st/mark2nd

DAN TURNER

Staff Reporter

Los Angeles magazine could fetch as much as $20 million if Walt Disney Co. opts to sell it separately from its other magazine and newspaper holdings, though most analysts believe it is worth only $10 million to $15 million.

The company most frequently mentioned as a likely suitor is New York-based K-III Communications Corp., which already owns New York and Chicago magazines.

A source close to K-III said the company may be interested in Los Angeles, but it's very unlikely that it would buy Disney's entire newspaper and magazine group.

Local investors are also eyeing the magazine. Seth Baker, former owner of Los Angeles magazine who now publishes two free-distribution city magazines (Beverly Hills 213 and Newport Beach 714) through his Beverly Hills-based Baker Newspaper Group, said he has expressed his interest to Disney.

"If they sell off individual pieces of the group, I'd definitely be interested," he said.

Sources speculated that current management at the magazine might also be putting together an investor group. Los Angeles Publisher Joan McCraw and Editor Michael Caruso were both out of town last week and unavailable for comment.

Coming up with a valuation for Los Angeles is difficult, because magazines typically sell for 10 to 12 times earnings. But the magazine is not believed to be turning a profit. It does appear to have turned a corner in the past year, however.

After years of declining circulation and advertising, it had 1,031.1 paid ad pages in 1996, compared to 975.4 in 1995, according to Advertising Age.

Local magazine sources said Disney will probably hold out for at least $15 million, and the company is not thought to be in a big hurry to sell.

In its current issue, Los Angeles has an article on the 10 most overpaid and underpaid executives in L.A. County. Disney Chairman and CEO Michael Eisner was No. 3 on the overpaid list.

The timing was almost certainly coincidental, but it does point up the uncomfortable relationship between Disney and the magazine ever since the entertainment giant took ownership of Los Angeles as a result of its purchase of Capital Cities/ABC Inc. last year.

Analysts say the magazine simply doesn't fit in with Disney's other operations, and the magazine's entertainment industry coverage sometimes hits a little too close for the comfort of Disney's top executives.

"I'm not surprised (Disney) would be getting rid of Los Angeles. It was a very difficult mix," said Lew Harris, the magazine's former editor.

For reprint and licensing requests for this article, CLICK HERE.