Friday, April 16, 2010

Reed Business Information announces it will close remaining 23 titles after M&A team fails to secure buyers

Friday is when the government releases information it wants to fly under the radar; it is also when media companies announce they are closing titles.
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Reed Business Information CEO Keith Jones announced in a staff memo that the company would be closing 23 titles effect immediately.

The titles effected:
Building Design+Construction, Chain Leader, Construction Bulletin, Construction Equipment, Consulting-Specifying Engineer, Control Engineering, Converting, Foodservice Equipment & Supplies, Graphic Arts Blue Book, Graphics Arts Monthly, HOTELS, Logistics Management, Material Handling Product News, Modern Materials Handling, Plant Engineering, Professional Builder, Professional Remodeler, Purchasing, Restaurants & Institutions, Semiconductor International, Spec Check, Supply Chain Management Review and Tradeshow Week.

Just as Nielsen was eventually able to find buyers for Editor & Publisher and Kirkus Review after they were closed, there is no doubt that there will be buyers swooping in to pick up some of these titles -- but at greatly discounted amounts. Many of these titles have been the leading books in their field, before being allowed to decline over the last decade as Reed constantly changed executive management, while rarely holding middle management to performance standards.

As a former construction industry publisher, I know the construction titles would make a nice group for someone at a bargain basement price. Sadly, the group has been allowed to decline with publisher, editorial and sales positions eliminated through the years. As I always consider personnel a major factor in pricing a property -- M&A firms rarely look beyond the raw numbers -- this further discounts their value.

Further effecting the price is that few of these titles have a strong presence on the web. The construction group, for instance, concentrated much of its efforts on, leaving once powerful brands such as Construction Equipment with mid-nineties looking websites.

Construction Equipment website:
Our parent company, Reed Elsevier, announced in July of 2009 its intentions to substantially exit its Reed Business Information-US publishing business, while retaining specific businesses. Over the past several months, multiple publishing brands were divested. As of April 16, 2010, the remaining publishing brands and their associated products and services have closed.

As a result Construction Equipment has closed. No additional print issues will be published, and this web site will close on April 30, 2010.

Finally, it needs to be said that there is plenty of blame to go around here. RBI's decline may have started before Marc Teren's hiring, but this is certainly the point where the U.S. division's fall was solidified. I remember with distain Folio:'s famous "Why Marc Teren Matters" feature that was a giant brown-nosing mess of an interview. Teren's acquisition of eLogic eventually led to a major divestiture (of which I was involved), and eventually Teren's sacking. But during the remaining part of last the last decade many of RBI's titles began to surrender their dominate positions. At the same time, RBI was not involved in acquisitions that could have filled out market segments, eliminated competition, etc. In other words, the division was already being set up for sale.

Now, 23 titles are being closed supposedly because no buyers could be found. "After nine months of concerted efforts by John Poulin, Jeff DeBalko and their teams, we have decided we must now conclude the divestment process for the remainder of RBI-US. Effective immediately, we are closing the publishing operations of the following titles that remain unsold," CEO Jones wrote in the staff memo.

Something smells. An eager seller would have fired their M&A firm first before throwing in the towel -- not to mention bringing in a new CEO with more M&A experience. But the tax rules may favor this option -- I do not know.

(Updates after the jump.)

Just a few days ago Dan Blank, who was the Director of Content Strategy & Development at RBI, penned a sad sounding post on his blog. Titled Publishers Ask: “Now What Are We Supposed to Do?”, it was a depressing review of the areas publishers have surrendered to competitors -- things like classified revenue, and content to Google. It ended with this: Clearly, I don’t have the answers, and quite frankly, no one does. But it’s always helpful to bounce ideas off of someone else.

It sounded, at the time, like something someone would say when they know the end is near. Maybe he knew something.  Larry Stewart, I assume the same Larry Stewart who is/was an editor on Construction Equipment, wrote a comment after Blank's post: "I think the journalist's role in finding recreating value for B2B communicators today is to figure out ways to talk about the sacred cows they've dodged for decades." It could have been written a decade ago by any editor who was witnessing the decline of editorial integrity at their publication. But, sadly, if written today, it sounds like the cries of an editor who is stuck in a situation where management devalues content and over values reproducing PR in hopes an company will reward them with an ad schedule.

Earlier this year I wrote a farewell to one of the best ad sales persons I've ever known -- Terry McGinnis. Terry was a true B2B ad pro, having worked in the Construction Information Group at McGraw-Hill (when that group existed) before heading up west coast sales at RBI on Construction Equipment. He was the kind of person you wanted on your magazine: someone who knew the industry, knew his accounts, kept track of the competition, and was completely self-managing -- except when he would reach out for advice, which he did every now and then.

I tried to hire Terry several times, the first time when I really, really wanted him to handle the west coast for me at Roads & Bridges -- but I just couldn't pay him enough. (I lucked out by getting Barbara Lodermeier to come over to R&B -- another fantastic B2B ad professional.)

Terry died late last year after a long fight with cancer, but Terry was the kind of person you built a team around.

For many the 23 Reed books closed today, there are B2B pros who, like Terry, can become the bedrock of your publications. Any publishing executive with even the slightest degree of talent should be on the phone right now recruiting them to their companies. And if they don't know to call . . . they shouldn't be in this business to begin with.

Here are some reactions from around the web:

Spend Matters: Earlier this morning I had the chance to catch up with an old friend and industry colleague, Doug Smock. Doug remains one of the most established and respected editorial voices in the procurement, supply chain and engineering arenas. A former editor of Purchasing, he has a long history (three decades) with the publication. Doug told me, "It's a very sad day. Purchasing has a long and storied history, and I was very proud to have been involved with it for many years, including four as a chief editor. Purchasing was very unusual among the trades because of the very strong bond it held with its audience -- great people like Gene Richter, Tom Stallkamp, and Shelley Stewart. I have not personally been involved with Purchasing for more than four years, but I will greatly miss it." As will I.

Graphic Arts Monthly:
Print CEO: "So, let’s see, Graphic Arts Monthly closing, Heidelberg not exhibiting at Graph Expo, and magazines to be mostly digital in less than ten years. . . Do we need more evidence about how the printing industry is changing?" -- in the comments.

Restaurants & Institutions:
Crain's Chicago Business: Reed Elsevier's spokesman said that Restaurants & Institutions could exist once more if "someone wants to purchase the (intellectual property rights) and start it up again in a new guise."

Also: "Keep following this story. I'm a PR guy, and I hear from a few editors w/ Reed that some of the titles named in the shut-down today, including at least one that already has a 'farewell' note on its home page, actually won't be killed." -- in the comments.

BtoBOnline: The closing publications “may still be sold, but you might have to put ‘sold’ in quotation marks because, when you announce a publication is closing, its value plummets,” said Reed Phillips, managing partner of DeSilva & Phillips.