A Divestment of 'Cyclicality'
Monday, February 25, 2008

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Industry Insiders Tight-Lipped as RBI Goes on the Block

International media conglomerate Reed Elsevier's planned divestment and ultimate sale of Reed Business Information (except for its exhibition business), a major B2B publisher whose titles include Variety, Broadcasting & Cable and Publishers Weekly, is generating buzz but little commentary from key players as to what this portends for RBI and for the viability of the ad-based B2B industry.

The divestment represents a move away from B2B's ad highs and lows. About RBI, Reed Elsevier CEO Sir Crispin Davis said in a company statement that "its advertising revenue model and the inherent cyclicality fit less well" with Reed Elsevier's subscription-based information strategy.

To industry observers, these developments might not come as a shock. Last weekend, England's Telegraph newspaper reported that Reed Elsevier, which employs 32,000 people in over 200 locations, was planning to eliminate 1,000 jobs. According to the statement released by Reed Elsevier to announce its planned divestment of RBI, which is being handled by the London-based office of UBS, the company's maneuver is designed to cut costs and "restructure" its portfolio following an analysis of its 2007 financial performance. (Reed Elsevier's recent sale of Harcourt Education also falls into this category.) Reed Elsevier is viewing these multiple moves as a way to "accelerate growth."

So far RBI CEO Tad Smith and company VP of corporate communications and public relations Salina Le Bris have declined to comment on the immediate future of RBI (formerly Cahners Publishing Co. prior to its 1977 purchase by English publishing firm Reed International). RBI publishes more than 80 B2B magazines, and manages more than 55 Web sites (go to our Digital Media chart on pages 6-7 for data on some of them).

RBI generated $1.9 billion in revenue in 2007, just a few hundred thousand dollars shy of analyst expectations.

This latest turn of events is interesting in light of a Q&A with Smith in min's b2b's Oct. 8, 2007, issue. When asked how RBI's business sector was doing, Smith was optimistic but cautious, as he compared the company's growth to a year before: "The portfolio overall looks reasonably good. Design is doing fine. Textiles are making a decent comeback after a tough period when the trade tariffs fell. Manufacturing is solid. Electronics is doing just fine, even though we discontinued a couple of electronics books versus the same period a year ago. Variety is solid, even though we had one less Oscar week this calendar year. The situation is reasonably good across the portfolio, and much, much better than last year." 

Reed Elsevier sees its new acquisition of U.S. risk-management business ChoicePoint Inc. for $4.1 billion as a positive step. In the press release, CEO Davis said that combining ChoicePoint and its properties with the company's LexisNexis risk-information and analytics group would solidify Reed Elsevier's position in a fast-growing market.

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