NEW YORK –- Steve Forbes says Fortune magazine had an ulterior motive for reporting Thursday on Forbes Media's financial woes stemming from an ill-timed deal with private equity firm Elevation Partners.
Shortly after publication, the company chairman and Forbes editor-in-chief told staff that Fortune published the story to hurt a top competitor, according to a memo obtained by The Huffington Post. The memo reads:
Today Fortune magazine published a story on Forbes with the clear intention of disrupting the business of its most formidable competitor.
Fortune was aware that this was highly confidential, private information and of no value to release to the public. Though the intention is to harm our business, it will not adversely impact Forbes because it highlights a very difficult time in the past when all the media industry was going through unprecedented upheaval.
Forbes has the finest team -- you -- in the media world today. Forbes is profitable and is successfully navigating these extraordinarily turbulent seas. The company continues to grow and thrive with powerful new strategies and talent.
In the piece, Fortune reported that Forbes Media "violated the covenants" of its credit line following the 2006 deal, when Elevation -- which has Bono as a backer -- bought a 45 percent stake of the media company just as the magazine market started tanking. Fortune described the deal as a "failure."
"It burdened Forbes Media with debt that it ultimately struggled to pay, so much so that the company had to be gutted," wrote Fortune's Katie Benner. "Five years later Forbes Media's earnings power has declined precipitously, and Elevation is nowhere near the return on investment it had predicted."
In a statement, Forbes Media said the company is "profitable and in full compliance with all bank loan covenants." The company added that "Elevation Partners are enthusiastic supporters of the direction of the company and have been full participants as these strategies have been developed."