Friday, April 30, 2010

Reed divestiture hits offshore unit, as well; three additional magazines find new homes with former publisher

Today, being April 30, is D-Day for many of the publications that Reed Business Information announced would be closed. A trip to the Construction Equipment website now results in a bounce to a corporate page that summarizes the April 16 announcement.

All that's left of the once mighty RBI-US

While it is possible that some of the magazines assets may still be sold, the ripple effects of the divestiture will continue throughout the industry.

One unit that is being effected is RBI's own Reed Data Services, housed on the Caribbean island of St. Kitts. Reed Data Services provides circulation, fulfillment, research, and other service for the RBI stateside titles and employed about 200 people. Now, according to a local report, only services tied to Reed Construction Data will remain.

As I wrote a few days after the RBI announcement, the divestiture of the Reed titles could have presented an incredible opportunity to launch a new business. The B2B industry is horribly behind in both web and mobile media and the door is wide open to investment.

Unfortunately, the financial community is divided into two segments: the NY based PE firms that have just about had it with B2B, and the often West Coast firms that shy away from anything related to print and opportunities that not 100 percent technology related.

The MMH website is still live, unlike other RBI titles, but continues to say that MMH is set to close today. →

As a result, the only two asset purchases ahve so far been announced.

The first involved the Supply Chain Group made up of old Cahners legacy title Modern Materials Handling, as well as Logistics Management, Supply Chain Management Review and Material Handling Product News. The deal was financed by EH Publishing along with the former management team of the group. The new entity will be called Peerless Media.

Although the corporate website for EH Publishing is, well, nothing to write home about, the individual property sites, like that for Electronic House are well designed.

The second purchase was announced this afternoon as Jim Langhenry and Steven Rourke have formed a new company and picked up  Control Engineering, Consulting-Specifying Engineer and Plant Engineering from RBI. The new company will be called CFE Media. These are books that Langhenry has been directly involved in for a number of years. (Langhenry was publisher of Plant Engineering while I was publishing two magazines at Cahners, later Reed in the early nineties.)

Of the remaining magazines, the R&I/Chain Leader and construction group hold out great promise. While both RBI groups reside within crowded fields, neither industry is well served online -- and certainly not via mobile or tablet.  I suspect however, that additional management acquisitions will be announced for these groups, as well.

I am not optimistic about these management buyouts. Unless these buyers are able to secure a nest egg worth of funds, the RBI titles will have to be run on a shoestring budget. Although the new companies being formed will not have the corporate overhead of a Reed, they will also not have the internal services either (though I recognize, having worked at major publishing firms, how the P&L's of publishing units can be overcharged by other internal units).

Nonetheless, I am sure that both new companies, and any others that arise from the ashes of RBI, will be run by motivated, experienced publishers.

Now the race will be on to see if the old brands, including the RBI titles, will be able to make the transition to new media products, or whether a new company, possibly without any interest in print at all, arises to take advantage of the wide open field.