An M&A Quintet: Vignettes from First-Half of 2005
Within this mix, several developments stand out: two once-mighty publishing
companies shed their properties, the private-equity market went on a selling
and buying spree, and a late-2004 deal continued to hover over the landscape.
Furthermore, a skein of smaller transactions dominated publishing’s M&A scene
during the first half of 2005.
Few people would deny that first-half 2005’s M&A activity played off the kinetic energy
generated from the October 2004 sale of Thomson Media to the Bahrain-based
investment firm Investcorp for $350 million (for a division that generated
revenue of slightly less than $200 million). The Thomson deal was
significant in heralding the end of the slow M&A market that dominated the
first part of the decade, and it signaled a new season of big-league M&A
hunting which dominated the first half of 2005.
Au Revoir, G+J
As publishing industry obituaries go, the most significant came in the spring of 2005 with the
close of Gruner +Jahr’s American operations. In May, the Bertelsmann AG
unit sold its remaining consumer titles;Parents, Child, Fitness and Family
Circle;to Meredith Corp. for $350 million. Later that month, the company
sold its ailing remaining titles, Inc. and Fast Company, for $35 million
to Mansueto Ventures, a new entity created by Morningstar Inc. founder Joe
Mansueto. The latter transaction was something of a fire sale for G+J,
which purchased Inc. and Fast Company in 2000 for a reported combined sum
of $540 million.
Curiously, the Mansueto deal was bracketed with very public discussions of
the transactions. When it became known Fast Company was not part of the
Meredith transaction, the New York Times ran an article on May 30 called
"Bad Business for Magazines About Business" that dubbed Fast Company and
Inc. has having "a value of zero." Fast Company editor-in-chief John Byrne
used his publication’s blog FC Now to accuse the Times of "warping a good
number of facts." Mansueto capped his purchase with the unusual step of
putting an advertisement in the New York Times defending his deal. "Of
course these magazines are an investment for me," said Mansueto in his
advertisement. "But if that’s all there were, I would never have written
The Meredith transaction did not make it into the New York Times, but in
the place of ink there was plenty of blood: Meredith sliced away 75 jobs
while downgrading another 75 spot from full-time to temporary positions.
In an interview with Folio:, Meredith president Jack Griffin described
those temp positions as "back-office jobs" that will "ultimately be
relocated to Des Moines, Iowa, though the people will not." In the
Mansueto deal, there were no announced layoffs;although Fast Company’s
John Byrne flew the coop a month after the transaction, seeking a new nest
as Business Week’s executive editor.
But G+J is not completely gone from these shores: it continues to operate
a printing company based in New York City.
VNU in Portfolio Management Mode
VNU enjoyed significant activity during the first half of 2005, selling several of its trade media
entities to a pair of growing media companies.
In April, VNU Business Media sold three of its three food trade titles
(Restaurant Business, Foodservice Director and Beverage World) and Retail
Merchandiser, plus the respective Web sites and conferences for each
publication and ID Access, an online database for the food distribution
industry, to Ideal Media, the new American-based subsidiary of Britain’s
Schofield Publishing. The terms of the agreement were not made public.
In March, VNU Business Media sold Apparel and its related assets
(including a web site, e-newsletter and conferences) to Edgell
Communications. While the terms of the deal were not made public, Edgell’s
president Gerald Ryerson described Apparel as being "in the neighborhood
of a $2 million property."
The Jordan, Edmiston Group, Inc. represented VNU in both transactions.
Advanstar In Transition
Advanstar Communications sold off a quintet of divisions to Questex Media Group, a new company
created by the private-equity firm Audax Group and Kerry Gumas, the former
vice president and general manager of Advantstar’s Information Technology
and Communications Group. The transaction involved the Information
Technology & Communications, Travel & Hospitality, Beauty, Home
Entertainment and Portfolio groups, with a total sum of 23 trade
publications, 50 web sites, 46 trade conferences and exhibitions going to
What remains in the Advanstar portfolio (including the Fashion, Life
Sciences, Healthcare, Pharmaceutical and Sports groups) consists of 55
publications, 75 Web sites and 57 trade conferences and expositions. More
M&A activity might be in Advanstar’s immediate future. On July 7, Joe
Loggia, president and CEO at Advanstar, issued a press release stating the
company was "exploring strategic alternatives, including a possible sale
of the Company.
VSS: Sell, Sell, Buy
Veronis Suhler Stevenson was highly visible during the first half of 2005 with its
sales of two major media properties. In May, VSS shook the M&A Richter scale with its
$650 million sale of Hanley Wood to an investment group led by JPMorgan
Partners, a private equity affiliate of J.P. Morgan Chase & Co. This was
the largest business-to-business media deal since the $900 million sale of
Advanstar in 2000. The Washington, D.C.-based Hanley Wood represented a
significant part of the VSS media portfolio, with 22 construction industry
trade publications, 17 Web sites, 15 trade conferences, a marketing
services solutions subsidiary and a data marketing operation covering
residential real estate and new home construction.
A month prior to the Hanley Wood deal, VSS snagged $200 million in its
sale of Canon Communications to Apprise Media, a group run by former
Primedia executive Charles McCurdy and backed by Spectrum Equity
Investors. Based in Los Angeles, Canon focuses on the medical device
industry and produces magazines, books, trade shows and online resources
for the medical device and plastics industries.
While selling off its properties, VSS continued to remain active in the
publishing world. In early April, VSS’ mezzanine fund injected $7 million
into Ideal Media Group LLP, a newly-created holding company for the
British-based Schofield Media Ltd. (which itself was on a buying spree, as
we’ll see in a minute). In another deal, the company’s fourth
private-equity fund, VSS Communications Partners IV, LLP, made its first
purchase by snagging the venerable Facts on File Inc. publishing group
(consisting of 1,800 titles) for an undisclosed sum. VSS also found time
and funds to invest in areas that were somewhat outside of its traditional
focus: a reported $55 million investment in DOAR, an information services
and consulting group specializing in business litigation and regulatory
issues, and a $30 million infusion into Southern Theatres LLC, a small
privately-owned southeastern regional cinema chain.
The Sum of the Whole
Last, but by no means least, was a high volume of smaller M&A transactions which add up to
significant activity for the publishing industry:
Paperloop sold the Tissue World events and publications in February to CMP
Asia, a subsidiary of United Business Media. The purchase price was
approximately $4.5 million. The Jordan, Edmiston Group, Inc. represented
Paperloop in this transaction.
Aspire Media, a two-year-old company run by publishing industry veteran
Clay Hall, made its first acquisition when it picked up the 30-year-old
Interweave Press, an arts and crafts publisher with titles including
Interweave Knits, Beadwork and Handwoven. But Nature Home & Garden (a
wholly-owned subsidiary of Interweave Press) and Interweave’s partial
ownership of Readymade was not part of the deal. Terms of the transaction
were not disclosed.
Apprise Media, another two-year-old company run by another publishing
industry veteran (this time, the aforementioned ex-Primedia honcho Charles
McCurdy) made its first acquisition when it snagged the 20-year-old
Beckett Publications for $20 million. Beckett publishes price guides for
sports and animation card collectors (including Beckett Baseball, Beckett
Football and Beckett Anime Collector).
Eighty-year-old Lebhar-Friedman purchased 16-year-old Dowden Health Media,
which now operates as the L-F medical publishing division. The deal was
estimated at being over $40 million, and GE Commercial Finance Global
Media & Communications was reported to have arranged a $35 million senior
debt facility to make the transaction happen.
ALM made two acquisitions: of Real Estate Media Inc., a commercial real
estate publisher and information provider, and of Insight Information Co.,
a Toronto-based conference producer specializing in legal events. Terms of
both deals were not disclosed.
Schofield Media, aforementioned in its acquisition of the VNU Business
Media titles, also acquired Redcoat Publishing (the parent company
American Executive and Health Executive). The terms were not made public.
BZ Media, the publisher of SD Times, expanded its hold on the Eclipse open
source developer media by acquiring a trio of properties from Penton
Media: two web sites (EclipseNews.com and EclipseSource.com) and the
e-mail newsletter EclipseSource. Penton may have been hungry for its own
acquisition, as witnessed in its purchase of the Kosher World Conference &
Expo from Shows International. Details of these transactions were not made
public (but hopefully the Penton team will save us a pastrami on rye and a
cream soda at their new show!).