Canon Communications' acquisition last month of four trade publishing brands from Reed Business Information US shows two divergent trends in how the recession and revenue declines are forcing business media companies to remake themselves.
On the divestment side, RBI's parent company, Reed Elsevier, is exiting the trade publishing business. On the acquisition side, Canon's purchase of Electronic Design News (EDN), Design News, Test & Measurement World and Packaging Digest demonstrated a continued belief in the future of ad-supported b-to-b media.
“They bought some good properties,” Ed Fitzelle, managing director at Whitestone Communications, said of Canon. “I think Reed was happy to have Canon come in [and buy these properties], although I'm sure it wasn't a rich deal.”
Financial terms of the deals were not disclosed, but the purchase price was likely nowhere near what Reed Elsevier hoped to get when it originally put RBI on the auction block in 2008.
Reed Elsevier's financial results for 2009 show why it was anxious to divest the unit. While the parent company had an operating profit of $1.24 billion overall, RBI posted an operating loss from continuing operations of $257 million.
As the number of ad pages fall, the efficiencies from printing costs that big b-to-b media companies could demand no longer strengthen the bottom line. Reed Elsevier is striving to limit its exposure to advertising revenue, as its intention to keep Reed Construction Data and Variety, which has a paid circulation, indicate. Moreover, the company's $4.1 billion acquisition of ChoicePoint underscores its efforts to become a business reliant on paid content.
In acquiring the four brands from RBI-US, Canon Chairman-CEO Charlie McCurdy has made it clear he believes in the future of ad-supported trade publishing. At the same time, he is not building a sprawling b-to-b media company serving a wide array of industries as RBI and others have done—including McCurdy himself in the 1990s at Primedia.
Instead, Canon is building around a single sector, which it calls “advanced manufacturing.” With this focus, McCurdy said, Canon will have a better understanding of the market and will be better able to provide marketing services to clients. “It will be interesting to see how the [b-to-b publishing] industry looks in three years as organizations seek sector expertise over raw efficiency,” McCurdy said.
Canon sees the Reed brands as a good fit with the trade shows it already owns that serve the medical device manufacturing sector. The deal, McCurdy said, “balances our portfolio, bringing market breadth to our publishing division that's comparable to the breadth of our events division; we now cover virtually the complete array of advanced manufacturing sectors across all media.”
Additionally, Canon said the acquisition will expand its database. “Canon's master audience file of professionals in the manufacturing design and engineering sector will exceed 1 million unduplicated individuals,” McCurdy said in a statement. M