Tuesday, October 9, 2012

Sale of entertainment trade journal Variety completed as RBI continues exit from U.S. B2B market

This morning Reed Business Information announced it had completed the auction of the entertainment trade publication Variety. According to an L.A. Times report, the venerable B2B will be sold for the rather modest price of $25 million to Penske Media Corp., already the publisher of Hollywood Life, Movieline, BGR and Deadline.com.

Penske Media is being backed in the sale by private equity firm Third Point.

According to the LA Times, Variety's revenue is around $45 million, though its profit is at $6 million. That makes the deal a bad one for RBI when calculated by either revenue or EBITDA – though the downward trend of the business probably forced their hand.

"With RBI’s increasing focus on data services, and the sale of our other US print magazines, it makes sense for us to sell the business," said Mark Kelsey, CEO of Reed Business Information.

RBI made a major move to exit the U.S. B2B market at the end of 2009, selling off many of its titles, closing others. Many of the old B2B magazine titles were salvaged by their publishing teams.

Reed was, at one time, probably the most important B2B in the U.S. market. RBI was assembled off the portfolio built by Norm Cahners. Cahners Business Information was, for years, a Newton, Massachusetts based publisher of some 90 magazines. Reed purchased Cahners in 1977 and began building the B2B company through additional acquisitions including Chilton Business Group and individual properties such as Variety (in 1987).

Variety in 1929
Many see the demise of RBI in the States as beginning with the hiring of Marc Teren in 2000 and his purchase of eLogic for $79 million in the middle of the tech boom. (The company also picked up CMD that year, a construction information and regional construction magazine company for $300 million in 2000.)

The acquisitions continued for a while but were quickly followed by major divestitures including the Cahners Travel Group and a large portfolio of trade titles.

The art of hiring the best publishers and sales pros from their industries was lost as the company concentrated on consolidating positions and eliminating overhead. The result was both stagnation and the loss of contact with the industries they were serving. The final sales and closings of 2009-2010 were only the continuation of the process of downsizing the London and Netherlands company's U.S. holdings.

"We are enthusiastic that PMC will become the new steward of the great Variety franchise, which Reed Elsevier has built over the past 20 years, and the Silverman family for the 80 years before that,” Neil Stiles, president of Variety said in the sale announcement.