Archive for the ‘M&A’ Category

How the Mighty Have Fallen: Ziff Davis Files for Chapter 11

March 5, 2008

Know thyself: And I do — I can be a bit of an own-horn-tooter. On May 18, 2007, I predicted that Ziff Davis would run out of money some time in the middle of Q3. August 15 rolls around (can’t get anymore middle than that), and ZD announces that it will not be making a scheduled interest payment on senior debt. It was bittersweet, being right, that is, because I was not rooting for ZD to run out of money.

At that point, the road for the beleaguered company was split: Renegotiate with debtors; or file for bankruptcy. Clearly, per today’s announcement, the latter has happened. Go to Foliomag.com’s article for the technical aspects of the deal that ZD cut with its senior creditors that led to this. Here’s my take:

What is left of ZD? You’ve got a print publication (PC Magazine) that has faced serious editorial attrition and is now being run by an editor that comes from the gadgets side of the operation. I have nothing against Lance Ulanoff, but he’s not a PC guy they way Michael Miller is (was in charge of PC Mag ed and is now working with the Ziff brothers; he still writes a blog for PC Mag). He doesn’t have the clout in the industry the way Harry McCracken does over at PC World. Furthermore, the mag’s publisher, Jason Young, was elevated to CEO in the wake of Bob Callahan’s departure.

So, depleted editorial leadership, depleted publishing-side leadership…for people that say everyone is replaceable, I say look what’s happened to PC Magazine. And what has happened? More after the jump. (more…)

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Arlington’s Publishing Experience

February 26, 2008

Arlington Capital Partners acquired Virgo Publishing, announced today.  The investment firm does have media and publishing experience.  Media (not publishing) in the form of Cherry Creek Radio, Main Line Broadcasting, and New Vision Group, and publishing experience in the form of Sports Information Group, publisher of the Daily Racing Form, “America’s turf authority since 1894.”

Click here for a full list of Arlington’s portfolio companies.

Virgo Acquired by Arlington: 2007 Performance of Xchange and Food Product Design is Off

February 26, 2008

I read today on Foliomag.com that Virgo Publishing has been acquired by Arlington Capital Partners.  Fine.  So I go to the IMS/The Auditor numbers that I have for Virgo year-end.  With Seaport Capital exiting the business just three/four years into its investment (v. the 5+ year norm we’ve seen in the industry over the past few years), I figured that Virgo’s 2007 performance was probably strong, making the time right for a sale.  Now, I don’t have access to the company’s books, so I’m not sure how true that is.  But the two books that I do have access to ad page numbers are Xchange (a telco book) and Food Product Design (food production).

Telco books were down pretty significantly in ad pages in 2007 (through Sept 2007 in ad pages, computing, software, telco ad pages were down about 10%, according to BIN).  Xchange was down a bit more: It went from being a 300 page book in 2006 to 194 in 2007, a decrease of 35%.

Conversely, according to BIN, restaurants, foodservice, et al, was up almost 4%  through September 2007.  Food Product Design, however, went from 699 pages in 2006 to 646 in 2007, a decrease of 7.5%.

Read the original article at Folio here.

The Catch: Reed Exhibitions Will be Retained

February 22, 2008

In all the excitement over the Reed Elsevier divestment of RBI, few caught that Reed will be retaining Reed Exhibitions, RBI’s tradeshow arm.  This makes me wonder why the company is selling RBI right now, in the face of a recession and a tough credit market.  My answer is simple: year-end 2007 numbers for RBI were very good; Tad Smith, CEO of the company, has done a good job at driving revenues while controlling costs (the company has $562 in profits on $1.9 billion in revenue); and, despite the poor economic forecast, analysts are still predicting growth in the advertising and marketing industries over the next several years, especially online.  This all adds up to max value and an analyst-backed growth curve that both PE groups and possibly strategics/hybrids (see Apax) can get behind.

On the other hand, Reed Exhibitions can still be a good growth business for Reed Elsevier, with tradeshow revenues set to continue to grow at a healthy clip over the next few years.  Question is, will buyers want RBI without getting the shows, too?

Apax Partners to Bid on Reed Business Information?

February 22, 2008

Before I register a bit of surprise that there is such strong public interest by Apax Partners in Reed Business Information this early on, let me say that first off, RBI is a very nice business with some of the strongest brands in B2B media (Variety, EDN, JCK, Design News….).  Second, Apax Partners has been on a shopping spree lately, purchasing both Emap and ALM for a total of almost $3 billion within the past year.  Apax also purchased VNU Business Publications (ex-UK arm of Nielsen) and Incisive Media, which will serve as the platform for a company that I think will be a combination of Incisive, ALM, and Emap, eventually, with Incisive CEO Tim Weller at the helm.

So, I did ask the question yesterday, who is going to spend $4 billion on RBI?  Looks like Apax might.  They were able to push the $2 billion+ Emap acquisition through a dry debt market…why not the same with RBI?

Reed Elsevier to Divest RBI: First Thoughts

February 21, 2008

As far as I can tell, Reed Business Information is the largest B2B media company in the US: by ad pages and by revenue ($1.9 billion in revenue in 2007 with $562 million in profit…nice margins, ma’am).

So, my first thought is, who is going to pony up $4 billion for what Reed-Elsevier calls in its earnings report a business that is exposed to the advertising market’s cyclicality.  We all know that the credit market isn’t looking so favorable for large deals.  Will RBI be sold in pieces?  I have a feeling that there will be some small divestments and that most of it will then be sold in a larger deal.  I imagine that when this deal actually happens, the credit markets will be different, and hopefully more favorable.  I also wonder about Reed’s BuyerZone, a lead generation business that RBI bought at the end of 2006.  According to an interview I did with RBI CEO Tad Smith in 2006, BuyerZone was to be run as an independent lead gen business with access to RBI’s resources and verticals.  I wonder if breaking Reed apart significantly devalues this piece of the puzzle.

More as information comes in.

And, if you haven’t already read this, Sir Crispin Davis, Reed Elsevier’s CEO said this in the 2007 earnings report:

“The sale of Harcourt Education has moved us towards a more consistent, cohesive and synergistic business and today we have announced a further major step with the planned divestment of Reed Business Information (“RBI”). RBI is a well-managed high quality business as evidenced by the success of its online growth and the control of costs. Its advertising revenue model and the inherent cyclicality fit less well however with the subscription-based information and workflow solutions focus of Reed Elsevier’s strategy.”

What’s Going on at CNET?

February 20, 2008

Jana Partners and Sandell Asset Management only have a slim chance of successfully agitating to add board members to CNET’s board, according to a Wall Street Journal blog.  Meanwhile, Jai Singh, EIC of CNET News.com (the site with one of the best URLs ever: news.com), will be leaving the company on March 10.  In addition to being the founding editor at CNET News, Singh brought home the bacon in 2004, helming the site to a National Magazine Award for online excellence win.  He will be replaced by Dan Farber.  Farber had been VP of editorial across CNET as well as EIC of ZDNet.  Thought he’ll be filling big shoes (Singh has been widely regarded for some time as the most influential technology journo in the world), Farber has ample prior experience:

– Been with ZDNet since 1996

– Was VP/EIC of PC Week and Mac Week (currently ZDE’s eWeek)

– Was a founding editor at Macworld

– Worked at both PC World and PC Magazine

Based on this move, Fox Business Online thinks the stock is going to move today.  Get the up-to-the-minute quote here.

B2B Media M&A: Thoughts and Influencers

February 11, 2008

I was at the DeSilva + Phillips Dealmakers Summit on Thursday.  The first panel I caught was about strategic B2B media companies making acquisitions in the current marketplace.  Jim Dolan, chairman, president and CEO of Dolan Media, thinks that the weak dollar will make buying overseas properties and doing business overseas difficult: “The weak dollar is terrible.”

He also weighed in on the Microsoft/Yahoo! situation (the latest):

“I don’t have a clue what’s going to happen.”

“Some of us don’t have a clue but talk about it anyway,” said Charles Engros, the moderator, and a managing partner at Morgan, Lewis & Bockius, LLP.