London – Reed Elsevier Plc announced that it intends to sell the publishing unit of Reed Business Information but will retain Reed Exhibitions. Sir Crispin Davis, CEO of Reed Elsevier, told reporters in a conference call on February 21 that the company is moving away from businesses with advertising revenue models.
“RBI is a well-managed, high-quality business as evidenced by the success of its online growth and control of costs,” he said. “Its advertising revenue model and the inherent cyclicality fit less well however with the subscription-based information and workflow solutions focus of Reed Elsevier’s strategy.”
The Reed Business Information unit, headed by Gerard van de Aast, includes 80 B-to-B publications including Variety, Publishers Weekly and Tradeshow Week; plus web portals, custom publishing, research and direct-marketing lists.
High-Performance from the Exhibition Group
Davis said Reed 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, has proven to deliver strong growth,” he said. The exhibition group produces more than 470 events in 29 countries. Some of Reed’s largest U.S. shows are the National Hardware Show; SHOT- The Shooting, Hunting and Outdoor Trade Show; and the JCK Show.
Bucking Industry Trends
The split will dissolve the synergies between the publishing and exhibition units under the Reed corporate umbrella. It runs counter to the trend of building integrated media companies along industry sectors rather than individual media. On the flip side, it clears up any implied corporate allegiance of Reed publications to Reed trade shows and vice versa.
Sale Could Take Time
RBI generated £906 million in revenues last year, representing 20% of total sales. Roughly 60% of its revenues came from advertising – too high of an exposure in a recession, Davis believes. The sale of RBI could yield upwards of £1.1 billion ($2.15 billion) and likely bidders include United Business Media and several private-equity firms. Davis said the sale may take “some time” due to the turmoil in the credit markets.
The Dutch-Anglo media giant also announced plans to acquire ChoicePoint in a $4.1 billion cash deal that is expected to close this summer. Together, ChoicePoint and Reed’s LexisNexis unit will become a global information-gathering powerhouse that collects and analyzes billions of records about who people are, where they live and what they own. Both companies play key roles in law enforcement, homeland security and intelligence. ChoicePoint, which has 5,500 employees, had net income of $32.4 million in 2007 on sales of $981.9 million.
Davis also announced today a cost-cutting plan to save £245 million from 2008 to 2011. London’s Telegraph newspaper reported the plans include eliminating 1,000 jobs.