Under new ownership

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What used to be Primedia's business information unit is, for the time being, going by the name of PBI Media Holdings. The business, which was officially acquired last month for $385 million by U.S. Equity Partners II, a private equity fund controlled by Wasserstein & Co., is expected to have a new name shortly. But the company doesn't need a new moniker for its employees to believe that it may be leaving its difficult past behind.

"In general, I think people are excited," said one insider who spoke on condition of anonymity. PBI Media Holdings, which includes such respected trade publications as Telephony and Registered Rep, has experienced its share of struggles over the past five years. As they did to most b-to-b media companies, the dot-com crash and the Sept. 11 terrorist attacks caused both the top and bottom lines to drop drastically at Primedia Business. This poor economic performance, in turn, forced numerous job cuts and trampled morale.

At Primedia itself, PBI Media Holdings' former parent, the questions are continuing. Kelly Conlin resigned in October as CEO, and Dean Nelson took over as president-CEO as the company explores splitting off its consumer guides segment from its enthusiast media and education segments.

At PBI Media Holdings, though, insiders and industry observers alike agree the outlook is much better. Before its sale, the unit posted five consecutive quarters of EBITDA growth. More important, the change in ownership from publicly traded Primedia to a cash rich Wasserstein & Co. private equity fund is supplying plenty of optimism.

"It's been five years straight of cost-cutting," said a PBI Media Holdings insider, who added: "It became a depressing place to work for a lot of people."

But Wasserstein & Co.'s involvement appears to have lifted the depression-at least for now. "The honeymoon is still on," another insider said. Some observers speculate that Wasserstein & Co., which will not face the quarterly scrutiny that publicly held Primedia was subject to, may be able to sell some of PBI Media Holdings' weaker properties while acquiring stronger ones. (Executives with Wasserstein & Co. could not be reached to comment on their plans.)

"They're going to be aggressive making acquisitions," said Roland DeSilva, managing partner of media investment bank DeSilva & Phillips. "They're going to invest back into the business and make it a strong business."

If Wasserstein & Co.'s other b-to-b media holdings are any indication, PBI Media Holdings should prepare for an infusion of capital. In addition to PBI Media Holdings, Wasserstein & Co. owns a number of other b-to-b media properties, including ALM and The Deal L.L.C. The firm is also a minority stakeholder in Hanley Wood.

Wasserstein & Co.'s b-to-b media holdings share a focus on producing strong editorial content, a focus that is encouraging to PBI Media Holdings staffers. William Pollak, president-CEO of ALM, which publishes American Lawyer and other legal publications, said of Wasserstein & Co., "What's interesting about them is that they believe in investment, not just investment as in buying properties but in investing post-acquisition."

In addition to investing in the print editorial product, Pollak said Wasserstein & Co. has supported investment in live events and Web site expansion, and has focused on promoting ALM properties to both readers and marketers. "They believe in marketing," he said. "They believe in being very aggressive about marketing and have a very sophisticated approach. We've seen a very big payoff."

Pollak said increased marketing efforts have boosted book sales, subscriptions and Web performance. He also said ALM has consistently grown its EBITDA since Wasserstein & Co. bought the company in 1997.

Although it appears that Wasserstein & Co.'s b-to-b holdings will operate as separate units, Pollak did say he expected Primedia to thrive under Wasserstein & Co.'s ownership. "I think they take properties and make them stronger," he said. "My bet is that you'll see that happen at Primedia Business."

Most observers expect Wasserstein & Co. to keep John French on as president-CEO of PBI Media Holdings. Anup Bagaria, vice chairman of Wasserstein & Co., who did not return phone calls seeking comments, said in a statement: "We look forward to working with the company's talented management team and personnel to build on the company's strong growth momentum."

Richard Mead, managing director at media investment bank Jordan, Edmiston Group, said Wasserstein & Co. executives "are very experienced investors and have shrewdly acquired a good platform with a strong management team, led by John French, which is very revenue-focused. We expect to see endemic organic growth complemented by an acquisition program that will focus on building up the core businesses as well as extending their revenue diversification program. Look for a transformed business within a relatively short time span."

Robert Crosland, managing director at media investment bank AdMedia Partners, cautioned that PBI Media Holdings will pose new challenges for Wasserstein & Co. and its chairman, Bruce Wasserstein. "He really hasn't had these kinds of properties," Crosland pointed out. "He's now become a volume vendor of information. He's no longer running information boutiques."

Others, however, expressed complete confidence in Wasserstein & Co.'s ability to improve PBI Media Holdings' performance. "There's a different philosophy running it than there has been in the past," DeSilva said. "That has energized the company, and it will energize the rank and file and make them much more competitive in the marketplace." M

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