A major consolidation in art publishing was announced today with a deal merging Art in America and ArtNews magazines that gives Art in America owner Peter Brant control of more than half the combined company. Under the proposed merger, which is pending shareholder approval, Brant will pay $3.4 million in cash for 6.4 million shares of Artnews S.A. held by Sergey Skaterschikov, representing an estimated 12 percent of the new entity, with the remainder of the transaction taking place in stock. Artnews S.A.’s existing shareholders will see their stakes diluted by about half to accommodate an additional issuance of stock, granting Brant another 47.6 percent for a controlling interest of approximately 60 percent in the combined publications. Included in the deal are two trade publications owned by Brant’s BMP Media Holdings, LLC.: The Magazine Antiques and Modern Magazine. (Interview Magazine, also owned by Brant, is separately held.)

The move will see the publications combine their web offerings at artnews.com, which is currently the online channel for ArtNews magazine. “The idea is to make artnews.com the single domain for the company when it comes to any digital editorial content — news coverage or information,” ArtNews CEO Izabela Depczyk told ARTINFO in a telephone interview this morning. “That means content from Art in America will be housed on the website as well... all the archival content [from all magazines], back issues, subscriptions, anything and everything will be housed on artnews.com,” she added.

The proposed transaction follows last year’s acquisition of ArtNews magazine by Poland’s Abbey House Group from longtime owner Milton Esterow, with Abbey House renaming itself Artnews S.A. and trading on the Warsaw Stock Exchange. In that deal, brokered by art banker and investor Skaterschikov, the then-acquirer, Abbey House Group SA of Poland, received a 51 percent stake in ArtNews for EUR 2.2 million (roughly $2.8 million at the time), according to a May 2014 filing. Now, the combined publications will continue to operate as Artnews S.A., which will seek to list its stock in Germany on the Deutsche Börse in addition to its existing listing on the Warsaw Stock Exchange. Skaterschikov told ARTINFO in an email that the deal would see his stake in Artnews S.A. drop from 25 percent to “below 10 percent... once this transaction is fully consummated.”

The new ownership of ArtNews had aggressively sought profitability since last year’s acquisition, moving much of the non-editorial operations to an office in Poland, with the New York headcount reduced from 34 in April 2014 to 17 full-time employees today, according to Depczyk, who will remain as CEO of Artnews S.A. following the merger. As a result of these cost-cutting efforts, the publication reportedly achieved profitability in the second quarter of 2015, and is expecting the same in the fourth but not the third quarter, due to summer seasonality in advertising. “Art in America along with the two supplements are profitable magazines... On a fully consolidated basis we [the new entity] will be profitable as of the end of 2015,” Depczyk said. The staff of the Brant publications is also slated to move into the ArtNews offices at 40 West 25th Street.

“As far as I know, there is no online publication in the art world that is making money on its own, so emphasizing the effort in its focus online, I don’t know how it makes sense,” Hans Neuendorf, founder and former CEO of Artnet, which maintains the competing online art news publication Artnet News, said in a telephone interview. “Merging the editorial staffs [of the print publications] would be the conventional way of benefiting from the merger but that that would mean that one of the publications would lose its identity,” Neuendorf added. (ARTINFO, held by Louise Blouin Media, is also a competitor in the art publishing business.)

The deal does not mark the first time the ownership of Artnews S.A. has transacted with Brant. In a meeting with this reporter in May, investment banker and Skate Capital principal Sergey Skaterschikov mentioned that an interest in Skate’s Art Market Research, now a unit of Artnews S.A., was sold to and then repurchased from Brant Publications between 2010 and 2011. And one strategic element of the deal announced today had already taken shape by May: the desire to dual-list Artnews S.A. in Frankfurt and Warsaw.

Artnews S.A. stock closed up 19.6 percent at PLN 2.14 in the Polish capital today, giving the current, pre-dilution entity a market cap of approximately $14 million. (The one-year high for the stock is PLN 2.80.) Under the proposed merger, the number of shares outstanding will increase from 24.7 to 53.6 million, according to Skaterschikov, which will substantially dilute the stakes of existing shareholders Redline Capital (currently 38.8 percent) and Ernst Hilger International (currently 22 percent), among others.