The following memos were sent by Reed Business' U.S. CEO Tad Smith and global chief Gerard van de Aast, regarding yesterday's sale announcement:
From: Smith, Tad (RBI-US)Sent: Wednesday, February 20, 2008 11:11 PMTo: RBI-US All Employees; RBI-US RCD - Canadian EmployeesSubject: IMPORTANT BUSINESS ANNOUNCEMENT FROM TAD SMITH AND ALSO ONE FROM GERARD VAN DE AASTAs many of you now know, our parent company Reed Elsevier announced this morning that it was putting Reed Businessâ worldwide publishing business up for sale. Reed Elsevier no longer views advertising-dependent businesses as aligned with its growth strategy. The announcement this morning neither surprises nor worries me. We have a vibrant and exciting business that is successfully making the transition from print to online across dozens of market sectors in countries all around the world. There will be a healthy appetite for our business and your many contributions as staff members. The sale process will commence immediately, but it is unclear how long it will take to complete. For my part, I am committed to leading our business as your CEO during the sale process and thereafter. In the meantime, business will continue as usual and everyoneâs jobs, benefits and pay will be unaffected. Reed Elsevier also announced a restructuring program this morning. RBI-US has a 7-year history of diligent cost and headcount management actions, including some taken earlier this year. At this time, RBI-US has no plans for a large scale layoff or other special headcount reduction program beyond the extreme care we continue to exercise on headcount additions. Tad Smith, CEO, RBI-USPlease read the attached communication from Reed Business CEO Gerard van de Aast for more information. REED BUSINESS CEO UPDATE February 2008Dear Reed Business colleagues, Let me first address the question why Reed Elsevier has decided to divest Reed Business Information (RBI). RBI is a well managed, high quality business. However its strategic fit with Reed Elsevier is less clear since Reed Elsevier has decided to move away from advertising driven revenue models and focus on subscription based models. It is important to note that this says nothing about the quality and attractiveness of our business and the markets we serve. On the contrary we are a strong, well run business and our markets offer many opportunities, particularly in the online space. RBI is well positioned and I would like to share with you my view on our business and my confidence that we will continue to do well under new ownership. Letâs start by summarizing our key assets and attributes. Attractive marketsThe B2B markets that we operate in show solid, sustainable, long term growth of around 5-6% per year. Our advertising customers need to promote their brands, generate leads, create awareness and support their products and services and our readers keep themselves up to date through our print and online content. Although marketing spend and reader behaviour is shifting, in particular to online, the value proposition that we offer is as strong as ever. Leading brandsWe own many of the leading brands in our markets. The list is long and impressive with franchises like Variety, Interior Design, EDN, New Scientist, Estate Gazette, Totaljobs, Elsevier, Boerderij, StratĂ©gies, Australian Doctor and so on. All our brands have a rich heritage going back in many cases over decades, but even more importantly have an exciting future as well through our online developments which are starting to have a real impact in our markets and enrich our long established brands. Financial stabilityOur business has size, scale and financial stability. RBIâs revenue in 2007 was $1,709m with adjusted operating profits of $253m, cash conversion was 109% providing a stable and attractive cash flow. Size and scale also matter allowing us to effectively manage our business and fund new developments derived from continued scale benefits and savings. RBI employs 8,164 people. Clear strategyOur strategy has been very clear and effective. It is built around protecting our core print business, driving online growth and making sure we have the best people in the business. We have complemented this with targeted acquisitions. Our strategy is very effective given our results in 2007 and prior years. We now have over $500m of online revenue which grew by 30% versus prior year. We will continue with this successful strategy going forward. The best peopleMost important of all we have great people that are very much connected with the markets we serve. Be it in editorial, sales or support functions we have great strengths and competence. We also have made great progress in understanding and executing online business models. Combined, this will continue to be the bedrock of our success. Looking aheadIn the coming period, senior management together with Reed Elsevier will focus on finding the right new ownership for the business. We all can contribute to this by staying focussed on our business and deliver the results as before. Nothing changes in the short term and we should not be sidetracked by the divestment process. Reed ExhibitionsReed Exhibitions has pursued a very successful strategy in the last few years. This strategy, which focuses on organic growth enhanced by targeted acquisitions and development of our business in high growth economies (BRIC), has proven to deliver strong growth. In 2007 results again were good with revenue growth of 12%. Going forward we will continue with this strategy and add programs for online development which will become increasingly important. Reed Elsevier will continue to invest in the business and support the strategy. There is a Q&A specifically related to our exhibition business available to answer questions that might arise. I would like to thank you for a good 2007. All businesses in Reed Business met or exceeded their targets and delivered good growth. In particular Reed Exhibitions performed strongly and in publishing we did see continued strong growth in online. Although the publishing and exhibition businesses will go their separate ways, both are well positioned. I do understand that all this might raise questions including what it means for you personally. A list of frequently asked questions is available on your local intranet site and aREna today. I also encourage you to discuss concerns with your management. Communication will be straightforward and timely. When we have new information we will share it with you. Let me close by expressing my confidence in our future and give you my commitment that I will lead us through this process.Kind regards,Gerard van de AastCEO Reed Business
[EDITORâS NOTE: The following quotes are from various sessions during Day One of the 2008 FOLIO: Publishing Summit. Weâll add to this list throughout the day.]
âNo oneâs reading the magazine on the Web.ââDana Spain-Smith, COO, DLG Media Holdings, on the tired practice of replicating articles online.
âIâm trying to eradicate the word âhope.âââMichael T. Carr, president, Niche Media, on motivating his sales team to succeed.
âThe company was founded on the social construct of Dad at work, Mom at home, Chevy in the drivewayâclearly, we needed to change.ââJack Griffin, president, Meredith
"I'd tell people it was for hot young women and the men who can afford them. That was the mission statement."âCarr on the launch of Vegas magazine."Every single company we've bought [had] underperformed badly."âFrank Anton, CEO, Hanley Wood, on the state of the companies acquired by Hanley Wood before being acquired.
"To grow a business, you have to take risks, and you have to fail."
âAnton on his business philosophy.
"Since 2000, the business-to-business media has not grown at all. Not at all." âAnton, setting up an inspiring luncheon keynote.
"This sounds like heresy, but I don't think there's going to be many magazines left. It's not going to happen in my business career time, but I think it will happen." âGloria Adams, senior VP audience, development, Pennwell, on her opinion of print-magazine life expectancy.
"It's not about your Web site, it's about things going on around your Web siteâpeople linking to it, talking about you badly ..."âChrisitine Oldenbrook, director of marketing and emedia, Bobit Business Media
"I think at some point there will be people who don't make the cut. It's hard to make those cultural changes."âOldenbrook on salespeople's ability to sell e-media."If you have a Web 1.0 site, you probably need to redesign it."âJanet Ludwig, president, Allured Publishing
"We talk to women the way they speak to themselves."âTina Johnson, editor-in-chief, Women's Health, on the voice of the magazine."Oh, no. Not the p-word again."âChris Peacock, editor and vice president of CNNMoney.com, on the overuseof the word 'platform.'"YouTube has lowered the standard for everyone."âKaitlin Quistgaard, editor-in-chief, Yoga Journal, on the obstacles ofproducing high-quality video content for the Web.
MIAMIâDuring his morning keynote, Meredith Publishing Group president Jack Griffin explained the company's approach to selling via its M360Âș group. "It's a group set up to be media neutral. We're not selling a particular asset, but creating solutions for our advertising customers."
It's an approach that focuses entirely on selling integrated packages, no longer simply selling customers on a single mediaâprint display advertising, for example. It's also one that other publishers are adopting. CMP has realigned its marketing services team to be customer-facing by region, creating customized packages that rarely come straight off a menu. "We have teams focused in the customer client regions, in the sales regions if you will, working with different customers to do that integration across different platformsâprint, online, events, or deeper into a specific platform," says Scott Vaughan, vice president of marketing and research.
"Customers don't necessarily say to you âI want to advertise,'" added Elliot Kass, managing director, client content services. "They just say, âThis is what I'm faced with and if you can help me figure out a way to solve this problem then I'm very interested.'"
MIAMIâJason Binn loves a good partyâand chances are youâve been to one. The companyâs magazines throw some 300 a year, says Michael T. Carr, Binn's boss and president of Niche partner Greenspun Media. But that doesnât mean his sales teams are invited.
Carr told a working group at the FOLIO: Publishing Summit today that Capitol File, Niche Mediaâs luxury D.C. glossy, recently thre a party hosted by Forest Whitaker. The magazineâs sales team, though, was not allowed in. âThey donât attend the party,â Carr says. âThey stand in the lobbyâand stay in the lobby.â The sales staffers are required to greet every attendee on their way inside, and thank them on the way outâa quasi-host role, he says.
The reason? Their job is to schmooze, notâas it often happensâbooze. âThey can give a five minute sales pitch in the lobby,â he says.
Reasonable, but Iâd wonder about what a policy like that does for morale. File that under âno fun.â
It used to be that talk of product placement in magazines would elicit a scary backlash from church-state fundamentalists. Not so much anymore.
In a working group devoted to marketing and brand development today at the FOLIO: Publishing Summit, many seemed to think the issue has gotten beyond whether or not itâs a church-state violationâitâs not longer a question ofÂ do or donât but more like when and how.
âI think it will come. It will have to,â said Kevin Hyson, executive vice president, CMO, of American Media.
âThere may be a place for product placement,â said Hank Boye, publisher of Harvard Business Review and co-moderator of the working group, but only after careful examination so that the brand and editorial reputation are not compromised.
Jeff Pedone, director of e-mail marketing at ALM Media, asked the group if the church-state issue with product placement is an internal one. âAre you holding onto something that your audience isnât holding onto anymore?â
Janet Ludwig, president of Allured Publishing and working group co-moderator, said a lot depends, of course, on the audience. âIn b-to-b, you really have to protect your credibility. Itâs our lifeline.â When a product appears in the midst of content, she said, âa reader needs to know if thatâs been paid for."
Meredith president Jack Griffin is tough. He showed up at the FOLIO: Publishing Summit in Miami to deliver his keynote this morning on crutches following emergency surgery on a broken leg he suffered a year ago, having lost his cellphone somewhere between LaGuardia and the Doral. And, like a seasoned prize fighter, he landed some key jabs on the state of the magazine business, through the lens of a Des Moines, Iowa publisher Griffin said was âfounded on the social construct of Dad at work, Mom at home, Chevy in the driveway.âThe company was âfounded on the social construct of Dad at work, Mom at home, Chevy in the driveway.â Which looks nothing like America in 2008, particularly in its ethnic makeup. For a company that publishes âwhite-breadâ magazines, he said, âthe change has been quite provocative.âHow provocative? Since 2002, they've spent roughly $600 million on launches (print and Web) and acquisitions, cobbled together an nice interactive marketing business. And despite some big successes (Griffin said Better Homes and Gardens had its best year ever in 2007), it's not all grits and gravy. In November, Meredithâs stock price was at $63 per share. Yesterday's closing price? "Forty-six dollars" he said.
SEE RELATED VIDEO Q+A: Griffin at the 2008 FOLIO: Publishing Summit
Here's an idea that has been kicked around ad nauseum (see: "Magabrands," Dave Zinczenko et al) but perhaps never expressed so bluntly. According to Computerworld and Infoworld editorial director Don Tenant, the print magazine no longer should be the âheart and soulâ of a brand. Instead, as his team did at IDG, publishers should think of their brand as an online media company with ancillary print and event products.âAdvertising is shifting from print to online in droves. So, what do you do?â Tenant said this morning during a session at the FOLIO: Publishing Summit. âContent should be going online first. Our strategy is to think of print as being a compilation of the content online.âLike a growing number of companies, Tenantâs group merged its print and online editorial teams four months ago. On the surface, at least, this seems to be an easy, efficient content management strategy.âI canât tell you how much this was a morale boost for everyone,â he said. âWe should have had a plan in place all along to unite the two teams.â
Programming note: FOLIO:'s editorial staff will be liveblogging this week from the 2008 FOLIO: Publishing Summit, which kicked off this afternoon at the Doral Golf Resort in Miami, Florida.
Check our special FPS page throughout the conference for updates, posts, videos and news reports, or by clicking on our FPS tag here.
A quick e-mail exchange I had today with Reed Business Informationâs vice president of corporate communications regarding a report in the England's Telegraph newspaper on 1,000 impending job cuts at the parent company:
From: Jason Fell [mailto:firstname.lastname@example.org] Sent: Tuesday, February 19, 2008 9:58 AMTo: [REDACTED]Subject: FOLIO: StoryImportance: HighGood morning Salina. I hope you had a nice weekend.
I read this story this morning about Reed Elsevier planning to cut 1,000 jobs. (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/17/cnreed117.xml)
Iâm curious: How will this impact Reedâs North American magazine business?
Please get back to me at your earliest convenience as I am working on a strict deadline.
From: [REDACTED] Sent: Tuesday, February 19, 2008 10:18 AMTo: Jason FellSubject: RE: FOLIO: Story
We can offer no further comments until Reed Elsevier's annual results are announced on Thursday (February 21).
Jessica Helfand takes on farming magazines, from 1878 to DJ Stoutâs redesign of Dairy Today, on Design Observer.
Late last month came news that b-to-b publisher Questex was buying FierceMarkets, the online-only publisher best known for its niche, email newsletters. I said then that I thought the deal had some major implications for our industry. Today I'd like to elaborate.
First, I want to make it clear that the FierceMarkets deal doesn't change my opinion of email newsletters. As a general rule, I can't stand the things. I much prefer to get my news and information via RSS feeds. As I wrote on this blog slightly more than two years ago: "With RSS I don't have to worry about annoying "unsubscribe" functions that don't work properly. With RSS I'm not subjected to a never-ending stream of spam and other marketing nonsense from publishers. For a content consumer, RSS is a vastly superior delivery mechanism. And I expect that, eventually, every consumer will demand it."
I still believe that.
But I also believe that this is not the time for b-to-b publishers to walk away from email newsletters. There's still money to made with themâlots of money. That's why publishers love them. But someday soon it will become clear that publishers' love of newsletters will not be able to compete with users' love of convenience and control.
But my dislike of email newsletters doesn't change the fact that I like the Questex/FierceMarkets deal. And here's why: I have a feeling (and it's really just a feeling, I don't have much hard information), that the deal isn't really about newsletters. Nor, for that matter, did Questex buy the company because FierceMarkets also distributes news via RSS. Nor is the deal about FierceMarkets' cash flow or profits.
I think Questex bought FierceMarkets' staff. This is a deal about people ... a sort of large-scale version of what Rex Hammock calls an "acqhire". I think Questex decided to buy a staff that understands the Web.
To understand what I mean, take a look at FierceWireless.
Drill down a bit. Read some pieces. Make note of the Web-friendly writing, short stories, agnostic links and reader-friendly design. Then head over to Questex. Make your way to the page about the company's telecom products.Then try, as I have several times today, to visit Wireless Asia.
What I found was a dead link. You can also try searching for "Wireless Asia" on Google. What you'll find is that the top link goes to Telecomasia.netâthe same dead link. In fact, the only live link I can find to Wireless Asia is to a three-year old media kit from when the product was owned by Advanstar.
And as I made my way around the Questex site today what I found over and over and over again was a series of dead links.
Now I don't want to judge Questex based on what appears to be a bunch of technical glitches. These things happen. But it seems to me that the dead links are indicative of a larger cultural problem at Questex.
I did eventually find some links that worked. Take a look at the site for Response Magazine or American Salon. See if it's as clear to you as it is to me that the sites are afterthoughts ... an endless series of in-house ads aimed at getting people to subscribe to the print products.
I believe that Questexâlike many other B2B publishers and newspaper companiesâhas recognized that it needs a staff that thinks of the Web first. And Questex, like many other publishing companies, has come to believe that its existing staff was never going to get there. So Questex did the right thing: it bought some folks who could help lead the company into the future.
FierceMarkets had been in play for awhile. And I know that some potential buyers thought the asking price was too high. But those folks were looking to add to already sophisticated Web teams. They didn't need to "acqhire" anyone. They just wanted to buy some cash flow and growth potential.
But Questex saw something else in FierceMarkets, something it neededâan editorial staff that could help shape the company's future.
We're going to see more of this. We may see a lot more of this. And as a general rule, I'm likely to applaud such "acqhires" of a Web-savvy staff. But I'd urge caution. FierceMarkets is a fairly rare bird. Not every online-only company is staffed by very bright people. And even the smartest number crunchers won't necessarily recognize brilliance in an online editorial staff.So make sure that whoever does your "acqhiring" or hiring understands Web culture.
Selling in a recession takes a different attitude. I always like to share this test with salespeople to see if they are up for the challenge. The trick is that this test actually comes from the December 1932 issue of Opportunity Magazine, written for salespeople during the Great Depression. If you can pass a sales test written during The Depression, I figure, you are up to sell in a mere recession anytime!
Answer Yes or No to the following:
1. Am I sociable?2. Do I think in terms of success?3. Do I really like selling?4. Do I think of my customers interests?5. Do I read sales literature?6. Do I study my prospects?7. Is my personal appearance a credit to myself and the company I represent?8. Do I realize that success in selling is a matter of study and perseverance and that the element of luck is small?9. Am I cheerful in the face of interruptions?10. Am I always courteous even with unreasonable prospects?11. Am I always scrupulously honest in my representations?12. Do I think of selling as a dignified calling worthy of my best efforts?13. When faced with competition, am I inspired to excel?14. Do I know that my line of goods is the best on the market?15. Do I try to make repeat sales?16. Do I talk quality first and price later?17. Do I stay with a line of goods long enough to give the line a fair trial?18. Do I spend sufficient time perfecting my demonstration to make it convincing?19. Do I take advantage of every modern convenience in selling, such as the telephone, telegraph and letter service?20. Do I canvas systematically and never skip places because they look uninviting?21. Do I work regular hours even when the weather is unpleasant?22. Do I put in the extra time to close a deal when necessary?23. Do I put extra effort into selling after a poor day?24. Do I put extra effort into selling after an unusually good day?25. Am I determined to stick with selling despite the lure of a blind alley, time clock, type of job?Score TableNo. of Questions Answered Favorably Rating:25: Star Salesman20: A Success15: On The WayBelow 15: Need Overhauling