Recent Event Highlights: Reed CEO Admits, 'We Should Have Sold RBI A Year Earlier', Earnings: Reed Elsevier Sharpens The Axe; $220 Million Extra Annual Savings Targeted, After The Non-Sale, RBI Confirms 35 UK Job Cuts, Reed Tightens The Belt Again: Layoffs Hit Variety, Multichannel, PW; Wage Freeze; B&C Shrinking, Industry Moves: Current TV; Reed Elsevier; Net Communities; Digitas; Bigmouthmedia, RBI Sale Cancelled; Reed Elsevier Still Wants Rid In Medium-Term, and 7 more...
Created by robertandrews on 10/12/2008
Last updated: 05/03/10 at 08:26
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Business and medical publisher Reed Elsevier's outgoing CEO Crispin Davis, given a somewhat heraldic exit interview in the Financial Times, has said he should have acted sooner to sell Variety and Farmer's Weekly pubilsher Reed Business Information (RBI), the divestment of which Reed announced last year before buy-up attempts were dashed on the credit market's rocks months later.
Davis: "In retrospect, we should have moved earlier but we really didn't think we could sell both education and RBI well at the same time. If we'd known that this downturn was going to happen, we may have said it was worth the risk."
Davis sold Reed's Harcourt education businesses to Pearson (NYSE: PSO) and Houghton Mifflin Riverdeep Group in 2007. But hindsight's a wonderful thing - few people foretold the liquidity logjam that would cause media acquisition money to disappear late last year and through in to this. The FT.com story says RBI's magazines are still for sale.
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Lack Of Finance Meant Fewer Media Deals In '08: Report
After The Non-Sale, RBI Confirms 35 UK Job Cuts
Reed Tightens The Belt Again: Layoffs Hit Variety, Multichannel, PW; Wage Freeze; B&C Shrinking
Reed Business Auction: The Bungled Process, And the Possible Next Steps
http://www.paidcontent.co.uk/entry/419-reed-ceo-admits-we-should-have-sold-rbi-a-year-earlier/
Reed Elsevier (NYSE: RUK) has promised to aggressively cut back and restructure its businesses by an extra $220 million a year as it recovers from a tumultuous year that saw the failed auction of its Reed Business Information B2B division and doubts over its ability to pay off massive debts. Out-going CEO Sir Crispin Davies says the company was "disappointed" not to sell RBI last year and blamed the "macro-economic environment and poor credit market conditions" on forcing the price down too far—but he described the division as a good business with a "record of success in developing online services" and repeated the company's desire to sell it in the medium term "when conditions are more favourable".
In its preliminary full-year 2008 results today the company reported revenues seven percent higher year on year at £5.33 billion with adjusted operating profit 12 percent higher at £901 million, a one percent drop. Both those figures would have been higher but for the falling value of the pound. Reed reported six percent revenue growth each for science publisher Elsevier, LexisNexis and Reed Exhibitions—but again the black sheep was RBI which is suffering badly on the print advertising side. More after the jump…
Results | Webcast
—RBI: Organic revenue at RBI was down one percent for 2008 and seven percent in Q408, with that trend expected to continue this year. On the up side, while print and recruitment ad revenue is being battered, RBI's online revenue grew 12 percent in 2008 and now accounts for a third of its earnings. The company plans to grow that proportion to 50 percent as the part of a "comprehensive and detailed" cost-savings plan that will "accelerate plans to migrate from print to online". Illustrating the speed of decline at RBI, its Q308 revenue was flat.
—Debt: Reed had planned to pay of the financing of its £2.1 billion Choicepoint acquisition with the proceeds from an RBI sale. But no sale happened leaving it to wait until January to tap into the bond markets—the company this week announced it had done just that and successfully negotiated a $2 billion credit facility with 19 banks, available from 2010, to replace its current $2.5 billion arrangement. Reed did manage one successful sell-off in 2008: it sold Harcourt Education for £2 billion.
—Cost-cutting: The $290 million cost-cutting plan announced in February last year—which is now on track to deliver $200 million (£140 million) a year in savings by 2011—has been stepped by $60 million (£42.1 million) a year and will now include RBI, which is expected to contribute an extra $160 million (£112 milllion) annually up to 2011. Davis is keen to stress the RBI cuts "are not going to do anything that makes its difficult to sell in future" and mainly affect "back office functions". While the online part fo the business will be considered, Davis says the company is "looking at the print side with an even sharper knife than that." 35 RBI job cuts have already been anounced.
—Outlook: Davis predicts that 2009 will be a "more difficult year" than 2008, but that its core businesses will remain resilient—LexiNexis and Elsevier currently generate 80 percent of revenues and are enjoying "growing demand for online solutions". RBI and the exhibitions business will however show "significant profit decline".
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Reed Does Raise Money, This Time For Itself
After The Non-Sale, RBI Confirms 35 UK Job Cuts
Reed Business Auction: The Bungled Process, And the Possible Next Steps
http://www.paidcontent.co.uk/entry/419-reed-elsevier-prelims-in-progress/
B2B magazine publisher Reed Business Information is to cut 35 jobs in the UK, as part of a cost-cutting drive to reduce overheads following last year's failed sell-off of the division by owner Reed Elsevier (NYSE: RUK), reports Guardian.co.uk. Earlier this week our sister site paidContent.org reported that cuts are being made at RBI's US titles including Variety and Publisher's Weekly as part of a seven percent reduction in headcount across the group. No word on which parts of RBI's UK portfolio, including New Scientist and Farmers' Weekly, will be affected.
We can't say they didn't warn us: Reed was clear that RBI would be accordingly "structured and managed" after the nine-month sale collapsed before Christmas. Reed was left with a business it didn't want and is now cutting back its costs—in the medium-to-long-term hope of selling it on if or when market conditions improve. There was no shortage of interest in RBI, but the sale was scuppered by a chronic lack of credit to finance the deal. With credit markets still in decline that sell-off, if it ever comes, maybe later rather than sooner…Though the job losses are coming, RBI's content team is still finding ways to innovate. Runway Girl, the Flightglobal.com blog by Mary Kirby, has posted its first vlog, as RBI head blogger Adam Tinworth, points out. One of her pet subjects is online connectivity on airlines…
http://www.paidcontent.co.uk/entry/419-after-the-non-sale-rbi-confirms-35-uk-job-cuts/
Another round of jobs cuts at Reed Business Information—7 percent across the board, according to multiple reports—and many of these come close to the bone. Nikki Finke, who wrote earlier today that she expected more layoffs at Variety this week, reports that her original number of 30 was "in the ballpark." She has started to list names; so far, it doesn't include Peter Bart but maybe they hope the longtime editor will just quit. At Publisher's Weekly, the layoffs include Sara Nelson, editor-in-chief for four years, according to the New York Times. I can report that half of the Multichannel News full-time reporting staff will be gone by the end of the month. I wrote for the cable magazine years ago and worked with the three veterans—Ted Hearn, whose FCC coverage has often been mentioned here, Linda Moss and Linda Haugsted. (I also worked with Sara Nelson at Inside.com.) At Broadcasting & Cable, only one staffer is out—PJ Bednarski, executive editor—but the magazine will shrink to standard size. Despite expectations to the contrary, MCN and B&C will remain separate but expect more resource sharing as they cover more with less. Weekly Variety may disappear.
Folio reports that the job cuts come along with wage and hiring freezes for 2009. The moves come five days after a reorganization that gave Jeff DeBalko, RBI's chief internet officer, the additional role of president of the new Business Media Division; MCN, B&C and PW are all part of that group.
http://www.paidcontent.co.uk/entry/419-reed-tightens-the-belt-again-layoffs-hit-variety-multichannel-pw-wage-f/
—Current: Online and TV news company Current has appointed former BSkyB (NYSE: BSY) head of programming James Baker to the new role of general manager for its UK operations, responsible for the British output of Current TV and Current.com. Baker, who joins from investment fund Fleming Media, has also worked as MD for Sky Networked Media, where he oversaw cross-platform content strategy for BSkyB channels.
—Reed Elsevier: Still smarting for the lengthy and ultimately unsuccessful sell-off of its B2B arm RBI, Reed Elsevier (NYSE: RUK) has lost another board member in the shape of Jan Hommen who will step down as chairman of Reed Elsevier PLC and the Netherlands-based Reed Elsevier NV at the companies' AGMs on April 21 and 22. RBI CEO and board member Gerard Van De Aast stepped down from both roles in December. Release.
—Net Communities: Technology sales network NetCommunities has appointed Mark Phillips, a head former head of Channel 4 sales house 4DS, as its commercial director. Phillips will be responsible for a network covering 200 tech websites and blogs, covering 6.5 million monthly unique users. Channel 4 shut down 4DS in October. From Mediaweek.co.uk.
—Digitas: Online ad agency Digitas, part of Publicis Groupe's VivaKi network, has hired Sav Evangelou as its new creative director from the Wunderman agency. Via NMA.co.uk.
—Bigmouthmedia: Lastminute.com CEO Ian McCaig has joined digital marketing agency Bigmouthmedia as a non-executive board member. Bigmouth CEO Steve Leach says McCaig knowledge of M&A will be of "particular value", a strong hint that he could be in the market to grow the company. From NMA.co.uk.
http://www.paidcontent.co.uk/entry/419-industry-moves-current-tv-reed-elsevier/
The verdict is in and the answer is: no sale. Reed Elsevier (NYSE: RUK) has announced that its torturous, nine-month campaign to sell the B2B magazine division is over. Reed announced to the stock market this afternoon that it has "terminated discussions with potential bidders" and that due to the poor economic outlook, shareholders would get more value by the company hanging on to the Farmers' Weekly and Variety publisher. RBI now remains separate business and will be run by RBI UK CEO Keith Jones as overall CEO of the company.
But it's still not over: Reed wants to sell RBI in the "medium term when conditions are more favourable" and in meantime RBI will be "structured and managed" to make it as profitable as possible. And that normally means redundancies, magazine sell-offs or both. As former CEO of RBI's US division Jim Casella has suggested, a broken up RBI would be more attractive to investors and easier to sell. These are all issues Ian Smith will be tackling when he starts as Reed CEO on January 1.
Out-going Reed CEO Sir Crispin Davies says the decision was one of realism: "We believe the business has significantly more value to our shareholders than could be realised in a transaction at this time." He says that RBI accounts for less than ten percent of Reed's operating profits and that it won't get in the way of Reed's overall goals—and he almost struck a positive note by saying the company now had "clarity" and could move on after the non-sale. But he would surely agree that this is not exactly how the company planned it. Reed wanted rid of RBI of ASAP and repeated its reasons again today by saying that RBI's "advertising revenue model and the inherent cyclicality" didn't fit with the rest of Reed's subscription-based magazines and information services. More on RBI after the jump...
Since February the sale has limped on as the reported price continued to drop from more than $2 billion (£1.2 million) to $1 billion (£613 million) throughout some of the worst trading conditions for the printed media for years. And as credit contracted around the world, Reed found it couldn't raise the capital needed to finance the deal and was forced to put in $330 million (£202 million), or perhaps even more, of own money in the hope of making it happen. There were several false dawns—we heard only last week that PE firm Bain Capital was in the final stages of bidding—but Reed itself admitted in November that the sale was in doubt.
http://www.paidcontent.co.uk/entry/419-rbi-sale-cancelled-reed-elsevier-still-wants-rid-in-medium-term/
We could be approaching the end of the Reed Business Information sell-off saga - and it looks like Reed Elsevier (NYSE: RUK) will either get less than it hoped or pull the sale altogether. Bloomberg, citing two unnamed sources claiming knowledge of the sale process, reports offers for RBI have now fallen to $1 billion (£613 million) and that outgoing Reed CEO Crispin Davies will either choose a final bidder or cancel the sale in the coming weeks. Bloomberg says Davies has met with two bidders – Bain Capital LLC and the combined TPG/ DLJ Merchant Banking Partners group – but there's no clue yet as to who might take the final plunge.
Reed originally put RBI on the auction block in February with analysts estimating the price at around $2 billion and some reports putting it as high as $2.5 billion. But as the company admitted last week, the same may not happen at all. Davies will be hoping something can be arranged before he leaves the company after eight years in March. Reed Business CEO Gerard van de Aast will also leave the company on December 15, though Reed was tight-lipped on whether his departure had anything to do with the torturous divestment.
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Industry Moves: RBI CEO Van De Aast Quits, Sell-Off Remains Unresolved
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Reed Elsevier Plans Even Sweeter Sweetener For Struggling RBI Sell-Off: Report
http://www.paidcontent.co.uk/entry/419-rbi-sale-nearing-end-game-will-either-pick-winner-or-yank-sell-off-in-c/
The CEO of B2B publisher Reed Business Information, Gerard van de Aast, is to step down next month and will relinquish his positions on the boards of both RBI and parent company Reed Elsevier (NYSE: RUK), throwing even more uncertainty on the former's planned divestment from the latter. From December 15, RBI's UK CEO Keith Jones will become acting CEO for the division worldwide "pending resolution of the current divestment process" – whenever that might be.
Under his watch, Van de Aast has seen the Farmers Weekly publisher become the subject of a protracted and troubled auction since April—a divestment that remains in doubt after reluctance from lending banks to finance the deal. Last month, Reed offered to stump up $330 million (£189 million) to make the deal happen and all the while the overall price of the division has been dropping in a sliding market, from £1.3 billion back in August to nearer £1 billion of late. Last week Reed admitted that, while the sale was at an advanced stage, "a satisfactory outcome cannot be certain". Release.
The company declared that under van de Aast's eight years as a senior manager RBI transformed from a print-based publisher to one that makes one third of its profits from online. Whatever his achievements, he still says goodbye to £1.1 million a year in salary and bonuses, according to Forbes.
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Earnings: Reed Stands Up To Economy, But RBI Sale 'Cannot Be Certain
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http://www.paidcontent.co.uk/entry/419-industry-move-rbi-ceo-van-de-aast-quits-sell-off-remains-unresolved/
Managing to dodge the economy's bullets in its remaining businesses, Anglo-Dutch science and business publisher Reed Elsevier (NYSE: RUK) told us what we already knew about the struggling efforts to sell its Farmers Weekly publisher Reed Business Information: "The process of divestment ... is at an advanced stage, although, in the present economic and credit environment, a satisfactory outcome cannot be certain. As part of the process, a consortium of financing banks are in discussions with a small number of prospective buyers to provide financing. Reed Elsevier has indicated a willingness to provide financing support for any successful bid."
The locks being put on doors to credit may be challenging would-be RBI buyers, but how is RBI itself doing? It's "held up well during the year despite generally difficult economic conditions with strong growth in online information services more than compensating for declines in print", Reed said, without giving figures. Now, though, it's beginning to see "more challenging advertising markets" - no wonder Reed wanted to "reduce exposure to cyclicality" in announcing the sell-off in February.
With a focus on B2B and data publishing, Reed reckons it's pretty sheltered from the wider consumer economic maelstrom. Outgoing CEO Crispin Davis: "Whilst the economic environment is undoubtedly challenging, our businesses are more resilient than most and we are in a strong financial position. We are continuing to invest in expanding our online product offerings to deliver enhanced customer productivity and effectiveness, and together with the restructuring programme we are tightly managing costs." That said, it's making savings of £15 million this year.
Subscriptions to the LexisNexis online legal article database have been hit by the worsening economy, with growth down on last year. Medical journals unit Elsevier said subscription renewals "remain strong", with good demand in web services. Release.
http://www.paidcontent.co.uk/entry/419-earnings-reed-stands-up-to-economy-but-rbi-sale-cannot-be-certain-lexis/
Just a few days after Reed Elsevier (NYSE: RUK) named a new CEO, it's already lost one bidder for its on-the-block Reed Business Information (RBI) publishing unit. US equity fund management Apollo Management has pulled out of the auction, Financial News reports, citing "a source close to the situation". That's despite the asking price dropping from a purported $2.3 billion (£1.46 billion) to a reported "below £1 billion".
We reported, from our Future Of Business Media conference last month, that former WSJ publisher Gordon Crovitz was working with Apollo and Strauss Zelnick's private equity firm Zelnick Media for a bid for the New Scientist and Farmers Weekly publisher. It's thought remaining bidders are Bain Capital (which has taken on Helen Alexander, the former CEO of The Economist Group as an advisor on the deal) and the group led by TPG and DLJ Merchant Banking Partners. The RBI sell-off has hit the rocks amid the credit crisis. As has been reported before, Reed had been offering vendor financing from its own coffers to $330 million, besides helping bring in other banks for staple financing, and now it may pony up more its own money.
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Three Bidders Left For Reed Business; Former Publisher of WSJ Involved In One Group
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http://www.paidcontent.co.uk/entry/419-private-equity-funder-apollo-pulls-out-of-rbi-bid-consortium-report/
Science and business publisher Reed Elsevier (NYSE: RUK) has announced who will lead the company following CEO Sir Crispin Davis' planned retirement. Ian Smith starts as CEO-designate on January 1 until Davis finally leaves in March after nine years in charge. Smith comes with chief executive pedigree - he was formerly CEO of building group Taylor Woodrow and General Healthcare Group. He will get a £900,000 annual salary but, as the release says, through the company's incentive and bonus scheme he could get an extra sum worth three times his salary - £3.6 million overall.
At the top of his bulging in-box will be the sale of Reed's B2B division, the New Scientist and Farmers Weekly publisher Reed Business Information, which has been hit by the loss of confidence among lending banks. Reed had offered to put in as much as $330 million (£200 million) to make the deal – and is willing to offer even more according to some sources. Last week, former RBI US CEO Jim Casella told our Future of Business Conference the unit should be split up and the price lowered. Release.
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Reed Elsevier Plans Even Sweeter Sweetener For Struggling RBI Sell-Off: Report
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@ FOBM: Ex-RBI CEO To Reed: Cut Asking Price, Break It Up
http://www.paidcontent.co.uk/entry/419-reed-elsevier-picks-smith-for-ceo-36-million-salary-and-bonuses-rbi-sal/
Reed Elsevier (NYSE: RUK) is unlikely to sell its Reed Business Information (RBI) as a whole entity and must cut its asking price, the former US CEO of the UK-based B2B publishing unit has warned. Jim Casella, who spent four years at RBI until 2005, told our Future Of Business Media conference in New York City: "The price expectation has to come down, it's going to have to be adjusted. It's going to be a question of seller financing, whether they hold some equity like they did in the Harcourt deal; I think you're going to see people do a combination if they really want to get deals through."
Reed was already offering a $330 million loan to woo buyers for RBI, publisher of New Scientist and Farmer's Weekly. Yesterday, it emerged it will pony up even more - and we learned three bidders are left including a consortium comprising ex WSJ publisher Gordon Crovitz and private equity houses Apollo and Zelnick.
Continuing, Casella - now CEO of his Case Interactive Media investor - told our moderator and ContentNext publisher Rafat Ali that RBI isn't a perfect acquisition right now: "It's logical that you'd (have to) be looking to buy events to go along with the company since exhibitions don't come with the property." Could it be broken up? "I think there's a very good possibility there's certain assets (buyers) want to focus on and others they want to dispose of. A new owner is going to want to follow a more focused strategy; I think there will be disposals."
B2B publishers have been in-play for M&A this year, but are clearly getting munched by the credit crunch. The leading bid for Lloyd's List publisher Informa also collapsed in September after the consortium of private equity houses in the hunt found itself unable to raise the extra cash for Informa's asking price. Asked about last year's Thomson-Reuters merger, though, Vanity Fair media columnist Michael Wolff told our event: "This was one of deals that, even in this environment, would've happened."
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Three Bidders Left For Reed Business; Former Publisher of WSJ Involved In One Group
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http://www.paidcontent.co.uk/entry/419-fobm-ex-rbi-ceo-to-reed-cut-asking-price-break-it-up/
We thought it already sweetened the offer once, but now Reed Elsevier (NYSE: RUK) plans to offer a bigger vendor loan to finance the struggling sell-off of its Reed Business Information (RBI) unit. Reed was already wooing buyers with a $330 million loan, but the divestment is treading water so hard now that Reed is considering giving even more to potential buyers, "sources" tell Telegraph.co.uk. If RBI keeps offering more leverage in this way, it may start to look sort of like RBI is buying itself…
B2B publishers have been in-play for M&A this year, but are clearly getting munched by the credit crunch. The leading bid for Lloyd's List publisher Informa also collapsed in September after the consortium of private equity houses in the hunt found itself unable to raise the extra cash for Informa's asking price. There would be dollops of irony if RBI's sale was scuppered, too - Reed's original motivation for selling was to "reduce exposure to cyclicality"; in other words, to get the hell out of an ad-funded publishing model that's looking far too fragile at the moment.
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http://www.paidcontent.co.uk/entry/419-reed-elsevier-plans-even-sweeter-sweetener-for-struggling-rbi-sell-off/
It goes on and on. Reed Elsevier's proposed sale of its UK B2B magazine division Reed Business Information is facing a new setback after French bank Calyon declared itself out of the banking syndicate financing the deal. Reed arranged a group of seven banks way back in April in a staple finance deal worth £900 million to buy the New Scientist and Variety publisher. Dow Jones's efinancialnews.com reports that another undisclosed bank has stepped in to replace Carlyon and quotes sources close to the deal who say that UBS, JP Morgan and BNP Paribas are continuing to back the process. PE firms Bain Capital, Apollo Management and a combination of TPG Inc and DLJ Merchant are also still thought to be in the running.
Bloomberg quoted two unidentified sources on last week who said that the total price for the deal had dropped from $2.3 billion (£1.3 billion) to $1.7 billion (£97 million) since August and such is the reluctance to finance such a large deal among the banking community Reed is prepared to put in about $330 million (£189 million) to make sure the deal goes ahead.
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http://www.paidcontent.co.uk/entry/419-french-bank-calyon-walks-away-from-rbi-sale-syndicate/
Reed Elsevier's troubled attempt to sell-off its UK B2B division Reed Business Information appears to be in big trouble with the news that bids for the company since August have fallen about a half-billion dollars, according to Bloomberg. Two unidentified sources close to the deal told the news service the bids have dropped to about $1.7 billion (£97 million £1.08 billion) from $2.3 billion (£1.3 billion). The company has struggled to attract the financing needed to seal the deal since the sale was announced in February. Merrill Lynch analyst Paul Sullivan said in a note that the risk of the sale "being delayed or falling through has clearly increased".
The markets were unimpressed and shares in Reed Elsevier (NYSE: RUK) dipped 6.4 percent to 468.25 pence at 1.34pm in London trading today, its lowest value since February 2004.
Three PE firms remain in the third round of bidding—Bain Capital LLC, Apollo Management and a combined group of TPG Inc and DLJ Merchant Banking—and seven banks are prepared to put in $900 million (£515 million) to finance the deal while Reed itself is set to put in about $330 million (£189 million). So it is still possible that a deal can be reached, but the finance shortfall, reportedly around $180 million (£102.6 million), must remain a problem at a time when banks are reluctant to invest or even lend big money.
http://www.paidcontent.co.uk/entry/419-rbi-sale-could-fall-through-as-price-falls-to-17-billion/
Will Reed Business Information ever get the deal it wants? The sale of the B2B arm of magazine publisher Reed Elsevier (NYSE: RUK), one of the biggest and most highly leveraged media deals around, looks increasingly unlikely as the New Scientist and Variety publisher struggles to raise enough money in these troubled times for credit markets. We learned in August that Reed hoped the sale would go ahead in October. But now The Financial Times and Reuters report that the deal is facing a funding shortfall of 10 to 15 percent, or, $180 million (£102.6 million).
RBI and its banker UBS originally organised a "stapled" finance package of $1.26 billion (£781 million) from a consortium of seven banks but the remaining lending banks will have now have to put more money in to make it happen, or Reed itself could be forced to pay the shortfall. PE firms Bain Capital and TPG remain in the third round of bidding along with former Reed non-executive director Strauss Zelnick, who is teaming up with PE group Apollo. That third round deadline is three weeks to four weeks away and many in the media world will be watching closely to see whether it is possible to make big-money deals happen in an unprecedented period of economic uncertainty.
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Earnings: RBI Performs Well, Divestment Attracts 'Strong Interest'
http://www.paidcontent.co.uk/entry/419-rbi-sell-off-stalls-again-with-180m-finance-shortfall/
When Reed Elsevier (NYSE: RUK) last spoke on the subject, it told the market it hoped to sell off its Reed Business Information (RBI) B2B publishing unit as early as October. But that was August - in the intervening period, a little thing has happened called "the credit crunch".
Could the crunch munch the planned divestment, which Reed announced a whole seven months ago? paidContent:UK has been told Reed is finding it much harder to sell the Variety and New Scientist publisher than it was even three weeks ago. Not even a $1.6 billion "sweetener" loan offered to potential bidders is helping much. There's now some question over whether the sell-off will go ahead at all, we understand.
B2B publishers have been in-play for M&A, but the leading bid for Lloyd's List publisher Informa also collapsed in September after the consortium of private equity houses in the hunt found itself unable to raise the extra cash for Informa's asking price. There would be dollops of irony if RBI's sale was scuppered, too - Reed's original motivation for selling was to "reduce exposure to cyclicality"; in other words, to get the hell out of an ad-funded publishing model that's looking far too fragile at the moment.
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Reed Business Information To be Sold Off; "Reducing Exposure To Cyclicality"
http://www.paidcontent.co.uk/entry/419-reeds-rbi-sell-off-in-the-balance-a-victim-of-credit-crunch/
Anglo-Dutch publisher Reed Elsevier (NYSE: RUK) reported "strong buyer interest" for its for-sale Reed Business Information (RBI) unit, which it is already presenting as a discontinued operation. Variety and New Scientist publisher RBI got 20 percent more online revenue in the six months to June, with digital now making up over a third of the total (over half in the UK).
And it's still performing well - operating profit up seven percent to £62 million on three percent better revenue of £484 million on online services demand - adding more blogs to its offerings this week. The sale is now expected in the second half of the year, with proceeds going to reduce Reed's debt. Reed said it would "reduce exposure to advertising revenues which fit less well with (its) subscription-based information and workflow solutions focus", ie. there's an advertising recession coming and Reed wants no part of it.
Overall group revenue is up 10 percent to £1.9 billion, again on online growth and sale of workflow solutions, with operating profit up eight percent to £401 million. CEO Crispin Black said being in the professional publishing sector shelters it from the consumer advertising downturn. Release & Financials
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http://www.paidcontent.co.uk/entry/419-earnings-rbi-performs-well-divestment-attracts-strong-interest/
-- RBI bids: Telegraph reports BusinessWeek publisher McGraw-Hill (NYSE: MHP) is among two dozen companies that have expressed an interest in acquiring Reed Elsevier's trade magazine and information division, which includes titles such as Variety, New Scientist and others. For MGH, if it decides to move froward, this will be a big move into the trade magazine and online sector… certainly anyone owning Variety and other RBI media titles will be under intense spotlight, at least from the media trades. More at paidContent.org…
-- Virgin iPlayer: Virgin Media (NSDQ: VMED) subscribers have watched BBC shows 10.5 million times via the cable provider's version of iPlayer, since its June launch. Pro rata, that's about 15 million views per quarter. In the three months to May, prior to the improved BBC service, Virgin had got 36 million total VOD views, up 10 percent, and VOD is used by 48 percent of subscribers.
-- HMV (LSE: HMV) kiosks: HMV plans to extend to the high street a tax loop hole that lets it discount entertainment it sells on its HMV.com website. HMV ducks VAT because it mails discs from Guernsey. Now it will also offer the practice from the kiosks it is rolling out in next-gen store. HMV said this will be a "very marginal channel" in the kiosks which are primarily designed for digital music downloading. Via Guardian.
Meanwhile, despite promising in January to bring down its UK iTunes Store in line with those in the Eurozone, Apple (NSDQ: AAPL) said yesterday it would not do that after all, arguing the falling pound and rising euro has done that job for it.
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-- Reed Business Information: Times says Reed Elsevier (NYSE: RUK) will offer a loan to suitors for its on-the-block RBI B2B publisher - an indication the financial markets are not in good shape. The paper fingers Advent, 3i, Candover, Cinven, Providence Equity, Permira and Apax Partners as likely bidders, but says Reed is having to sweeten the deal with a loan because "it could not persuade banks to provide enough financing that would be attractive to a private equity group".
-- BSkyB: Sky is considering a €2.5 billion takeover of Spain's Digital+ pay-TV network, FT.com claims. Grupo Prisa, which also owns the El Pais news publisher, is thought ready to auction the broadcaster. BSkyB (NYSE: BSY) parent News Corp (NYSE: NWS) recently strengthened its European TV operations by promoting Sky Italia head Tom Mockridge to head the continental business and buy more of Germany's Premiere. FT.com suggested News Corp would continue with such deals while Sky could use its strong financial position to buy Digital+ itself.
http://www.paidcontent.co.uk/entry/419-ma-watch-rbi-tempts-with-loan-bskyb-eyes-spain1/
A busy day for United Business Media - splitting its CMP tech publishing unit in four and posting 2007 results (operating profit up 11.5 percent on an adjusted basis). UBM CEO David Levin explained breaking CMP apart is all about brand over medium…
-- Shifting from print: When Levin joined three years ago, three quarters of revenue was from magazines. But, after spending $225 million on 17 other properties, mags now make up less than a quarter of revenue. "If 75 percent of your revenues come from your events, information services, the way to maximize profits is to (let) those units act in an autonomous fashion, focused on their customers."
-- Organizing for audience: "The business is now integrated - with media, events, online, print and information services. The market was crying out for these things to be audience- and market-centric. We don't any longer have to be governed by the overwhelming economies of scale that come from print." So CMP becomes TechWeb, TechInsights, Everything Channel and Think Services - each "very discreet". "We've taken out a holding company layer which no longer was adding value - if the guys dealing with enterprise want to do something, they are empowered to do something; they don't need to go through a central hub of overhead."
But how can becoming smaller help you compete with big players like IDG? It will have "no bearing". Example - though each unit is individually empowered, UBM is also retaining a central team to sell ads across technology publications.
-- RBI: How about buying Reed's B2B unit? "We're not interested. The last three years, we've spent a huge effort in creating this integrated media model, linking events, online and data together. It would be a huge step backwards for us to go out and look for a print player with some online properties." UBM may buy others, though, and will increase it's acquisition budget from last year's £95 million ($188 million) to between £150 million ($298 million) and £250 million ($496.82 million). UBM's bought one company every three weeks on Levin's watch.
-- Present day: "We're no longer going to be managing this business by looking at the next - we've effected the transition, we're no longer a print company." It's 19.2 percent online, 40 percent events, 24 percent print and 16 percent data. Levin said income from last week's Games Developers Conference in San Francisco is 15 percent up on last year.
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In a big move in the tech trade media space, United Business Media, the UK-headquartered media firm has broken out CMP into four separate companies. The company, which went through a bunch of layoffs and restructuring and then booted its CEO, has now decided to do away with the CMP brand name, and the four smaller companies are:
-- TechWeb, formerly CMP's Business Technology Group, will be led by CEO, Tony Uphoff (Uphoff was the former publisher of Hollywood Reporter, though only for nine months before John Kilcullen replaced him...Kilculen departure from THR/Nielsen was announced yesterday). Some of the brands that are going with this company are Light Reading, InformationWeek, TechNet and MSDN Magazines and others. The 2007 proforma revenues for TechWeb were $148 million.
-- Everything Channel, formerly CMP Channel, will be led by CEO Robert Faletra. Some of the brands in this company are CRN, VARBusiness and others. The 2007 proforma revenues for Everything Channel were $73 million.
-- TechInsights, formerly CMP's Electronics Group, will be led by CEO Paul Miller. Some of th brands in this company are: EE Times, Semiconductor Insights, TechOnline, Embedded Systems Conferences and Portelligent. The 2007 proforma revenues for TechInsights were $83 million.
-- Think Services, formerly CMP's Game, Dr. Dobb's and International Customer Management Group, will be led by CEO Philip Chapnick. The brands in this company include Game Developers Conference, Gamasutra.com, and Dr. Dobb's Journal. The 2007 proforma revenues for Think Services were $61 million.
CMP has done over 18 acquisitions worth about $225 million in the last three years, particularly events and business information products. With these four companies, the new businesses will share support functions and infrastructure, including finance, IT services, legal and global account and sales management. The central functions will become part of UBM's US infrastructure with Scott Mozarsky, currently CMP's CFO, taking the role of COO. More here in the release.
Meanwhile, UBM also announced its 2007 earnings, and net income fell to 108.8 million pounds ($216 million) from 141.9 million pounds a year earlier. Sales rose 8.5 percent to 801.6 million pounds. Also, UBM CEO David Levin has also ruled out bidding for Reed Business Information, telling Reuters: "We have a strategy built around integrated media so to pick up a block of orphaned print assets is not consistent with what we want to do."
Updated: Sam Whitmore in his e-mail newsletter on why this makes sense: "UBM also has improved the odds of selling its former CMP properties, if it were so inclined. For example, a buyer interested in TechWeb might not necessarily be interested in, say, CMP's assets in computer games. This sort of thing happened to CMP a few years ago: it bought Miller Freeman for its tech media assets, but it also wound up owning Guitar Player magazine."
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