Ascend Continues Dramatic Restructuring

Ascend Media, a b-to-b publisher of medical and healthcare media, has been spending 2007 shifting its portfolio around, pursuing a restructuring strategy that's a far cry from its acquisition-heavy period of the last few years. The company is closing three of its medical journals as of their December issues this year, it sold off its 17-title Professional Services Division in August, and is in the process of divesting its four-title Dental Group and the remainder of its Healthcare Group.

When the dust settles, the company will have ratcheted down from $150 million in revenues, which it was expected to be making following its late 2004 purchase of Medical World Communications, to around $70 million. But that doesn't necessarily make for a troubling outlook, contends Cam Bishop, the company's CEO, despite the fact that medical media is taking a pounding.

Bishop concedes the medical media market is "challenged" and notes that the primary care market has been hit the hardest. He says it all ties to a decline in drug launches over the last three years, which peaked in 2004. As a result, says Bishop, "coming off three straight years of decline and a 2007 with declines north of 20 percent and no bullish forecast for next year, we aren't in a position to sustain those properties." The magazines ceasing publication include: Physician's Money Digest, Family Practice Recertification and Internal Medicine World Report.

The majority of the staff of the three closing titles have been notified that they will be let go, with a small portion being reassigned to other titles within the company. "We just aren't big enough to absorb all of them into other properties," says Bishop.

The three closing titles are part of the eight-magazine Healthcare Group and Bishop confirms that Ascend is "evaluating the sale" of the remaining titles in that group.

Of all the realigning, a significant number of staff are no longer part of Ascend, a figure one source pegs at 40 percent. However, Bishop declined to comment on that figure, indicating he didn't know the exact amount.

Dental Group to Be Divested

Meanwhile, Ascend's four-title Dental Group is also on the block. "It's been a relatively flat market for us and we deemed it non-strategic for us at this point," says Bishop. He says a close on the sale of Dental Product Shopper to the magazine's founder and publisher Dave Branch is imminent. The remaining titles have two interested buyers, says Bishop, who says a full divestment of the group will likely be resolved by year's end.

All of this comes on the heels of the sale of other properties over the last few months. In August, Ascend sold its 17-magazine Professional Services Division to BNP Media. In October, Expo magazine was sold to Folio:'s parent company Red 7 Media.

In all, approximately 30 titles will have been either sold or closed by the end of the year. Yet Bishop maintains this is all part of the normal mechanics of running a private equity-backed company like Ascend. "There is always this media assumption that buying is good and selling is bad. Sometimes it's neither and sometimes it's the opposite," says Bishop. "Companies shift portfolios to maximize strategic alignment, opportunity and gain. The big picture for Ascend is no different than any other private equity-backed media business. At a point in time, it will be sold. In our case, that is not anticipated to occur for another 2 to 3 years."

After closures and divestitures, says Bishop, Ascend Media will have four divisions across the country with over $70 million in revenue and approximately 275 employees. "We will be far less reliant on pharmaceutical advertising and new drug launches," he says.

Nevertheless, contracting a portfolio of $150 million to somewhere over $70 million is a precipitous drop, and one source with knowledge of the situation says there could be several reasons for this: "A) the need to raise money to pay down debt or offer certain private equity investors an exit strategy; B) they were offered a huge premium price for those spun off assets or c) those assets really don't fit in strategically with the direction Ascend now wants to go."

The source notes that Ascend is likely in a pay-down scenario, but if Bishop is tightening his portfolio to put the focus back on healthcare assets that are less dependent on pharma advertising, then the divestment of the Product Services Division and the lone event market title, Expo, makes sense.

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