http://www.smh.com.au/news/business/bono-buys-a-slab-of-forbes-empire/2006/08/07/1154802819012.html

David Carr
August 8, 2006
SINCE the death in 1990 of the legendary publisher Malcolm S. Forbes, his four sons and a daughter have sold his cherished assets here and there: his private jet, the collection of Faberge eggs, a handwritten copy of Abraham Lincoln's last address.

The father suggested in his memoir that it was only natural and proper that his children do so but even he might have been taken aback by the most recent divestiture.

On Friday the family sold a significant minority stake in a newly formed company, Forbes Media, which includes the 89-year-old Forbes magazine started by their grandfather, B.C. Forbes; the Forbes.com website; and some smaller media properties, to Elevation Partners, a private equity group.

Malcolm Forbes might have been even more surprised that among the new owners of the company is Bono, the U2 singer, one of six partners in Elevation.

"My father and grandfather would approve," said Steve Forbes, who spoke by telephone from the offices of Forbes in Manhattan along with Roger McNamee, a managing director and co-founder of Elevation. "No one is the master of their own universe. Time and circumstances change. We wanted the wherewithal to pursue the enormous opportunities in front of us and Elevation understands technology, media, and print. They are not just a source of capital: they are a source of insight."

Mr Forbes emphasised that the company was looking for operational flexibility rather than familial liquidity but it was clear that a business model that had been "blasted by the web", as Mr Forbes put it, had taken a toll on the Forbes family.

The magazine, swept up in the optimism of the digital boom in the late '90s, paid dearly in terms of credibility and advertising pages when the market collapsed. Two runs for president by Mr Forbes also proved costly.

There are bright spots: the company's own aggressive investment in digital technologies is showing significant profits and advertising sales at the magazine appear to be recovering a bit. But the Forbes brothers have struggled to maintain profits at the business magazine, which is unaligned with a large media company, at a time when advertising continues to flee print.

The Forbes company and Elevation circled each other for several months - Mr Forbes and Mr McNamee both described it as a mating ritual - before getting down to serious negotiations in the past several weeks, concluding on Friday with the signing of documents. Terms of the transaction were not disclosed but some people said it gave Elevation a stake of more than 40 per cent at a cost of $US250 million to $US300 million ($327 million to $393 million).

No one directly involved would confirm those numbers. Though Forbes has now taken on partners, it continues to be an exceedingly private enterprise.

Proceeds from the sale will be used both to invest in the business and to pay out money to members of the family.

Mr McNamee called the alliance with Forbes a "brand-defining moment" for Elevation, a relatively new partnership conceived by a rock star and guided by some of the more successful venture capitalists on the US West Coast.

"It says that we are in the business of helping content creators in the traditional media world manage the transition imposed by the internet," he said. Bono was not in the Forbes meetings, but Mr McNamee said that the singer was attracted to the magazine because it "has a point of view" and had shown "a consistent philosophy throughout its history".