London-based Reed Elsevier rocked the trade magazine publishing world when it announced Friday that it was shutting down the last 23 titles published under its Reed Business Information U.S. division that it did not sell or intend to keep. Knowledgeable sources, however, tell FOLIO: that Reed never had any intention to sell those particular titles on the open market.
The shut-downs follow a nine-month period during which Reed said it put nearly all of the titles published under RBI U.S. back on the block, after a failed auction of the entire unit in 2008. During that time, the company managed to sell 20 titles which it says collectively accounted for approximately two thirds of the overall revenue of the portfolio it was divesting. The company intends to hold onto noted Hollywood trade Variety, Reed Construction Data, Marketcast and 411 Publishing, as well as Buyerzone, a lead generation business.
In January, RBI shuttered Video Business, Manufacturing Business Technology and Industrial Distribution.
Following the announcement Friday, a Reed spokesperson told FOLIO: the company would be open to discussions with potential purchasers of the intellectual property associated with any of the closed down brands. But questions came up regarding whether those titles were ever actively up for sale.
"So far as I know they were never brought to market," says Frank Anton, CEO of construction trade publisher Hanley Wood. Among the titles shuttered by RBI were Building Design+Construction, Construction Bulletin and Construction Equipment. "Had they been, Hanley Wood would have taken a look at select assets in RBI’s construction portfolio."
“The only explanation [for not bringing the titles to market] I can think of is that Reed intends to build a strong data presence in those markets and doesn’t want anyone competing with them,” says one source who wishes to remain anonymous. “It’s what we are now calling the ‘Gourmet Magazine Must Die’ syndrome. Condé Nast owns Bon Appétit and couldn’t allow anyone to compete against it—they had no other choice. They had to kill Gourmet.”
Or did management decide the process would be too big a distraction without a meaningful upside? When asked if Reed did in fact actively try to sell the shuttered magazines, the company spokesman said "our preference was to sell the titles rather than close them."
But Adam Schaffer, president of media sales and consulting firm Media Revenue Partners, isn’t so sure. A former publisher of Tradeshow Week (one of the shuttered titles), Schaffer says he had contacted RBI and its broker numerous times over several months about purchasing the magazine but was never given a solid response either way.
“I was publisher of the magazine from 2002 to 2007, so I am intimately familiar with the brand, its P&L and its opportunities,” says Schaffer. “At one point I even offered to buy the magazine as-is, without going through the usual due diligence, but was never told yes or no. I was kept in limbo until the announcement that it was closing.”
Schaffer says the conversations never progressed to a price negotiation phase. “I think this is a great argument about why big companies shouldn’t own too much media,” he says. “Tradeshow Week is an important part of the tradeshow industry. For a company like Reed, that makes so much money off Reed Exhibitions, to turn around and shut down the magazine that serves that market, you have to wonder how committed they are to the industry.”
Fingers Crossed for a Resurrection
If Reed is indeed open to discussions with potential buyers, any one or several of these shuttered magazine brands could someday live again. From Randall-Reilly’s Modern Woodworking to Nielsen Business Media’s newspaper industry title Editor & Publisher and book industry magazine Kirkus Reviews, a number of shut-down trade titles have found new owners—and a new life—over the last several months. And, presumably, on the cheap.
“If an owner closes a magazine before selling it, it means they don’t want to incur further losses and have come to the conclusion that the sale price will be lower than the losses they might incur,” says DeSilva + Phillips managing partner Reed Phillips. “Buyers of magazines that have closed are presumably buying them for very little consideration.”
Schaffer says he’s already contacted RBI about acquiring the IP rights to Tradeshow Week. So has the Tarsus Group, a London-based international media company that produces the Trade Show News Network, an online tradeshow directory.
U.S. CEO RD Whitney declined to say whether Tarsus previously pursued RBI’s Tradeshow Week, but says Tarsus "will definitely fill this void in a very big way, whether it’s picking up the Tradeshow Week assets or by launching something completely organic from our assets.”