Job cuts are the norm with most any merger, but the recent 5% staff cut at VNU Business Media points to the specific difficulties of integrating two disparate trade publishers.
The cuts, which total 176 positions, are part of a larger restructuring announced earlier this year as a result of the creation of VNU Business Media out of what was once BPI Communications Inc. and Bill Communications Inc., subsidiaries of Anglo-Dutch publishing giant VNU Communications Inc.
Many of Bill Communications’ products were at one time owned by Miller Freeman USA, which VNU Communications bought last summer for $650 million, and focus on such markets as real estate and sports apparel. BPI Communications’ products are typically less staid, such as Hollywood Reporter and Billboard.
Now, these titles are part of the same big family and are facing pressure from their corporate parent to justify its acquisition. In July, VNU Communications split its VNU Business Publications USA unit into three divisions: the Marketing-Media Retail division, including the Adweek Magazine Group; the Travel, Performance, Real Estate-Design and Food Service division; and the Entertainment division. All told, the company has 71 b-to-b titles and more than 140 events.
As part of the restructuring, Mike Marchesano, formerly Bill Communications CEO and one-time president of BPA International Inc., was named president-CEO of VNU Business Media, replacing industry veteran John Wickersham.
"I was surprised John left before the integration," said one top b-to-b publishing executive, on condition that he not be named. "He wanted a change and was looking for something more entrepreneurial rather than a company encumbered by a large global bureaucracy."
The bulk of the job cuts came from the closing of the VNU Expositions office in Dallas, where 109 people worked. There were also layoffs in the Marketing-Media Retail division.
The shuttering of Retail Tech and the merging of Progressive Grocer and Supermarket Business also resulted in job losses. "With the falloff in e-retail, it was not a sustainable market going forward," Marchesano said. "I’m looking at all of our products and portfolio to find what I call ‘sustainable franchises’ and to create that style throughout the organization."
Marchesano said there are currently no plans to sell any of the products in the company’s portfolio and that VNU Communications is open to new acquisitions. "We have to create the strongest organization for our shareholders, employees and customers," he said.
Mountain of debt
Wilma Jordan, president-CEO of media investment banking firm Jordan Edmiston Group Inc., said that despite the cutbacks, VNU Communications remains robust on both sides of the Atlantic."They have 21,000 employees in the U.S. and 35,000 worldwide," she said.
The parent company is still saddled with a great deal of debt, having paid $2.7 billion in 1999 for Nielsen Media Research, which tracks TV audiences, in addition to the $650 million it paid for Miller Freeman.
Earlier this month, VNU Communications warned it expected full-year earnings before goodwill, amortization and one-off items to decline up to 5% due to further deterioration of the economy since the Sept. 11 terrorist attacks. In August, it had forecast 5% growth for cash earnings. The company said its business information group, which contributes about a quarter of VNU Communications’ revenue, had been especially hard hit by the sharp downturn in advertising. The decline in air travel since the attacks has hurt the company’s trade show portfolio.
"Things haven’t gone as smoothly as perhaps they could have with the integration of Miller Freeman products. You combine that with the economy and all the uncertainty out there, and it makes for very challenging times," said the b-to-b publishing executive who requested anonymity. "There is an aggressive campaign to transform the company to be a bit more subscriber-oriented and move even more business to the U.S.