Top Deals of 2009
The M&A that defined the industry.
Bonnierâs Buying Spree
Buyer: Bonnier Corp.
Seller: Hachette Filipacchi Media U.S.
Date: June 2009
Takeaway: The dismal economy of 2009 allowed some buyers, Bonnier in particular, to exploit opportunities for distressed titles or brands that no longer fit a sellerâs portfolio.
Bonnier Corp. announced in June that it acquired five magazines from Hachette Filipacchi Media U.S.: American Photo, Boating, Flying, Popular Photography and Sound & Vision. The deal capped a string of acquisitions by Bonnier, which also bought Working Mother Media from MCG Capital and Scuba Diving from F+W in September and December 2008.
In Bonnierâs case, the titles, for the most part, represented a good fit with its existing portfolio and positioned the company for growth when the economy regains its footing. âFor us, they were very established brands,â said Bonnier CEO Terry Snow. âBoating fit right into our group. The photography books are a new area for us and Sound & Vision will fit right into the Popular Science group. Flying is sort of an outlier, but itâs a strong brand. Our focus has been identifying strong brands that fit with what weâre doing.â
Comments: âThe Hachette titles bolster Bonnierâs market position in the boating category and open up a new category with Flying. It was a good way to expand into more enthusiast verticals and be the dominant publisher of enthusiast mags.â
Buyer: Bloomberg L.P.
Price: $9.3 million, pre-tax
Date: Closed in December 2009
Takeaway: If 2009 was the year of distressed sales, BusinessWeek was the poster child deal. The troubled magazine with a strong brand reputation, which once brought in more than $100 million, ultimately sold for $5.9 million after taxes.
After months of speculation, it was finally reported in July that McGraw-Hill was attempting to sell BusinessWeek.
Ironically, a Bloomberg report noted that McGraw-Hill had hired investment bankers Evercore Partners to help broker a sale, prompting the company to release a statement that it was indeed âexploring strategic optionsâ for the ailing title.
Putting the title up for sale was a necessity for McGraw-Hill. The companyâs media division profits dropped a whopping 76.4 percent to $2.8 million in first quarter 2009, according to company reports. BusinessWeekâs situation was just as dire. Ad pages were down about 37 percent for the first two quarters per PIB and McGraw-Hill was reportedly losing between $20 million and $40 million per year on the title.
While the business category in general was down significantly, BusinessWeek, eventually renamed Bloomberg BusinessWeek, still commanded a strong brand platform.
Bloomberg paid just over $9 million for a title that once made almost 15 times that in top line revenue.
Comments: âBusinessWeek gives Bloomberg a consumer-facing brand that it did not have before, which is a logical expansion for them.â
Eight of Nielsenâs Media Brands
Buyer: e5 Global Media
Seller: Nielsen Business Media
Price: $70 million (estimated)
Date: December 31
Takeaway: This acquisition not only marks new ownership for eight well-established brands, it also marks the formation of a new media company.
Following company-wide cuts, restructuring, and the shuttering or sale of underperforming titles throughout 2008 and early 2009, Nielsen Business Media put eight of its media brands on the block: The Hollywood Reporter, Billboard, Back Stage, Brandweek, Adweek, Mediaweek, the Clio Awards and Film Journal International.
Private equity firm Pluribus Capital Management and financial services firm Guggenheim Partners agreed to acquire the brands for a rumored $70 million and formed a new company called e5 Global Media.
Richard D. Beckman, former president/chief executive of CondĂ© Nastâs Fairchild Fashion Group, will serve as the new companyâs CEO.Â âThese are iconic brands within their industries. It will be my goal, now, to build them into successful multiplatform properties with global footprints,â said Beckman.
Just two weeks after shuttering E&P, Nielsen sold the 130-year-old title to Irvine, California-based Duncan McIntosh Co. Inc. At press time, arrangements were still being made to sell Kirkus Reviews.
Comments: âThis looks like it will be an excellent acquisition for Pluribus. I think theyâre buying at the low-point in the market and these properties are in a good position to rebound now that the economy is getting back on track.â
Buyer: Fletcher Asset Management
Seller: Newsweek Inc.
Date: December 31
Takeaway: Fletcherâs acquisition of Newsweekâs Budget Travel will leave the entire staff, including current management, virtually intact.
New York reported last November that Newsweek Inc. might shutter Arthur Frommerâs Budget Travel, but the company quickly denied the rumors, despite the titleâs decline in ad pages. (Between January and September, Budget Travelâs ad pages dropped 28.1 percent compared to the year before.)
However, Newsweek Inc. decided to cut its losses nearly a month later by selling the title to investment advisor Fletcher Asset Management for an undisclosed amount.
Fletcher also announced in the statement that it planned to keep âessentially allâ of the employees at Budget Travel and budgettravel.com, including its current management team.
Comments: âBudget Travel was a casualty of this severe economic downturn. It went from being nicely profitable to becoming a drain on Newsweekâand, therefore they had no choice but to sell it.â
Large Consumer Publishers Investing in Digital
Buyer: Meredith, Conde Nast, etc.
Takeaway: Large consumer publishers continue to invest heavily in digital services.
In July, Meredith announced that it would acquire a strategic stake in mobile marketing firm The Hyperfactory in order to enhance the services and capabilities of Meredith Integrated Marketing, the companyâs b-to-b custom print and online communications unit.
Later in the year, CondĂ© Nast announced that it partnered with Adobe to build an application that would enable the publisher to put its magazines on various digital devices. According to president/CEO Charles Townsend, the initiative is âthe next piece of the puzzle for developing our unique magazine content in a digitized format that will drive the new devices that will hit the market in 2010.â
Hearst Interactive Media followed a few weeks later with its own announcement: the impending launch of its Skiff Reader, which features an installed e-reader service and access to a digital store where consumers can purchase newspaper and magazine content.
Comments: âThe most important thing big consumer magazines can do in 2010 is to invest in their digital strategies through either acquisition or organic growth.â
Buyer: Adobe Systems Inc.
Seller: Omniture, Inc.
Price: $1.8 billion
Date: Closed October 2009
Takeaway: The deal was a high-profile merger of creative and metrics technology. If successfully implemented, it will be an intriguing combination of creative and data-based business models.
In a world where marketers want audience data down to the content level and publishers want the ability to optimize and track usage across content properties, the acquisition of Omniture by Adobeâat face valueâappears to deliver on that ideal. Adobeâs move effectively merges analytics and optimization tools with the content creation stage.
The deal gives Adobe an analytics platform it can merge with its content creation products and allow it to get deeper into digital advertising and e-commerce. âAn integrated workflow will streamline the creation and delivery of relevant content and applications,â said Adobe in a statement announcing the deal.
On the Web, design isnât simply eye candy, itâs directly tied to performance. âItâs not enough to have a campaign that looks great,â said Heidi Voltmer, group product marketing manager of Adobeâs creative solutions business unit. âYou need to measure the ROI, and continually optimize and bring down the costs of creation.â
Comments: â[The industry has] been integrating these tags through CMS systems for years. Whether theyâre going to automate that with an âOmniture-ize Thisâ button in Dreamweaver will have to be proven out by Adobe.â
Buyer: TPG and CPP Investment Board
Seller: IMS Health
Price: $4 billion (plus $1.2 billion in debt assumption)
Date: November 2009
Takeaway: The largest private equity deal of 2009 came in the data market. However, some observers say the price wasnât high enough.
While magazine publishers are scrambling to build out their data business, one 2009 deal showed the potential of data. In November, IMS Health Inc. agreed to an acquisition by private equity firm TPG and the CPP Investment Boardâwhich invests funds of the Canada Pension Planâfor $4 billion cash (plus the assumption of $1.2 billion in debt).
IMS Health is a provider of market intelligence, including information, analytics and consulting services to the pharmaceutical and healthcare industries worldwide.
While the IMS Health sale was one of the largest deals of the year, regardless of market category, many say the sale price wasnât high enough. The Street.com wrote an article called âIMS is Being Stolenâ that criticized the sale by saying IMS is a âcash printing machineâ with no competitors that was being sold for far less than its true value.
Comments: âThe deal of the year.â
Buyer: The Economist Group
Seller: Times Publishing Co.
Price: $100 million+
Date: July 2009 (closed 3Q 2009)
Takeaway: One of the largest magazine deals of the year.
In July, The Economist Group said it had agreed to acquire Washington D.C.-based Congressional Quarterly Inc. from Floridaâs Times Publishing Co. Congressional Quarterly published CQ Weekly and Governing Magazines and as part of the agreement, CQ joined the Economist Groupâs Roll Call in a new unit: The CQ-Roll Call Group.
Two months after the acquisition, however, The Economist Group reorganized the CQ-Roll Call Group, eliminating 44 editorial positions across its newsrooms.
CQ-Roll Call Groupâs editorial operation is now divided into eight new groups: CQ News, Managing CQ Today, CQ Weekly and CQ.com; CQ Legislative Tracking,; Roll Call; Consumer Publishing, which will manage Congress.org and CQPolitics.com; Specialty Publications, including Budget Tracker, HealthBeat and CQ Homeland Security; Copy and Production Desk, a merger of CQâs Continuous News Desk, copy desks and Web productions desks; Art and Graphics and New Product Development.
Comments: âThese products have distinct voices but Roll Call and CQ are very complementary in nature.â
Seller: Times Publishing Co.
Date: July 2009 (closed 3Q 2009)
Takeaway: Print still has a place, even among companies that have done a good job diversifying away from it.
One week after agreeing to sell Congressional Quarterly to The Economist Group in July, Floridaâs Times Publishing Company said it put Washington, D.C.-based Governing on the block.
Governingâalong with its Web site and related events propertiesâwas one of three divisions that made up the former Congressional Quarterly group. Governing targets state and city government officials and has a BPA-audited monthly circulation of 80,000.
State and local government and education technology publisher e.Republic agreed to purchase Governing, along with its Web site and related events properties, from Times Publishing Group.
âWeâve been building up the IT space in terms of state and local government and we feel that acquiring Governing will allow us to get beyond the IT space,â said e.Republic COO Paul Harney.
Comments: âWhen it fits and the core product is solid, print is still an attractive buy.â
Perhaps by definition they arenât âtop dealsâ in terms of purchase price or profile, but what weâre calling the âsaviorâ dealâa magazine publisher that either was closed down or on the brink of closing but was revived by a passionate group of staffers or readersâholds a solid place on the list this year.
One example was RBI, which shut down all but one of the 14 magazines published under its Associated Construction Publications group. The titles were quickly snatched up by John White, the groupâs former co-owner.
Another was Relix, acquired last summer by a group of investorsâincluding a core group of the magazineâs employees.
In May, Thomas Publishing licensed the rights to Industrial Equipment News, which shuttered in March, to TCC Media, a group of the magazineâs former staffers.
Regional publisher Zivyak Media Groupâwhich owns Berkshire Livingâbought defunct San Jose and will relaunch it in 2010. âI couldnât imagine leaving the 10th largest market in the country without a good looking city book,â says CEO Michael Zivyak.
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