Monday, January 4, 2010

Piecemeal sale of Reed Business assets opens the door to possible fire sale of other titles

RBI CEO John Poulin has confirmed what we all have been hearing: RBI can not find a buyer for its entire portfolio of publications and will be selling them piecemeal.

According to the memo, obtained by, the staff was told last week that Reed will soon be announcing the sale of some of its titles, but not all -- meaning closings and layoffs are soon to follow.

"We have not been able to sell the business as a whole and this unfortunately will result in title closures and job losses across the business during the first half of the New Year," wrote Poulin in the internal memo dated December 31st (was this really distributed on New Year's Eve?).

Having gone through the 2001 divestiture under Marc Teren, I can tell you that a Reed divestiture is an ugly thing. That divestiture was particularly bad because the portfolio of properties offered made little sense: magazines without their trade shows; trade shows without their magazines; magazines recently turned around; others sold that had consistently been profitable. Let's just say the process was not handled well, and the motivation for the sale, the ill advised purchase of eLogic for $79 million in 2000, left a bad taste in the mouths of many employees (what? we've been sold to pay for a profitless web company?).

This time around, since the goal is to get rid of everything, it makes sense that all employees of RBI will be effected in one way or another so few can complain that they have been singled out for action.

My guess, though, is that any announced sales will only really begin the process, not end it. Properties not sold and designated for the scrap heap could, in fact, find eager buyers looking for a bargain -- assuming the right financing or investors can be found. (Still a big "if" in this economy.)

The key is making the announcements sooner rather than later. This would allow time for strategic buyers to come forward.

In the end, though, the careers of many B2B magazine professionals may be determined by the actions tax experts as Reed execs decides whether it is better to minimize the losses . . . or write them off.  It is also possible, if you really want to be cynical, that some executive at Reed has been offered a bonus to simply get rid of the problem (RBI) and won't, in the end, care if the deals make sense of either the parent company of the effect employees.

The world of B2B publishing, new decade is starting out not that differently than the old one.