There are three things media companies really enjoy: 1) Breaking a big story, 2) Making money and 3) Getting dirt on other media companies. According to Fortune, it has a good amount of number three. To make it even sweeter, the dirt they have is about their biggest rival – Forbes.
Forbes Media violated covenants on a revolving credit line that it took out in 2006, according to a letter sent to the company by J.P. Morgan. The loan, which was part of a series of transactions that allowed the Forbes family to cash out more than $100 million from the company, is due next July.
While Forbes Media remains confident that it will be able to pay back the loan, Benner says that the deal Forbes struck with minority owner Elevation Partners to save the company has hurt it much more than Forbes ever let on:
It [the deal] burdened Forbes Media with debt that it ultimately struggled to pay, so much so that the company had to be gutted. Five years later Forbes Media’s earnings power has declined precipitously, and Elevation is nowhere near the return on investment it had predicted.
We patiently await an article in the next Forbes attacking Fortune’s fortune.