MB: What's your take on b-to-b media M&A activity in 2006?
Edmiston: The big news for the year was [Wasserstein & Co. Chairman Bruce] Wasserstein, actually. Up until he started making his moves, b-to-b was sort of floundering. Deals were being done, but nothing of consequence. [After Wasserstein's deal to acquire the b-to-b media assets of Primedia] the private equity guys started realizing that there were some really good deals in b-to-b and started to move. Not that everybody follows everybody, but [Wasserstein] made some big bets and other people started saying, "Wait a minute. Let me take another look at this stuff," and subsequently you saw the VNU deal.
MB: What do you expect in 2007?
Edmiston: Consumer magazines, as opposed to b-to-b, started picking up about three years ago, and b-to-b started picking up last year. There are a lot of opportunities in b-to-b, which is also a more fragmented industry to start out with. 101communications, for example, went through the valley of death and came out the other side, and previous management did a great job to keep it alive. Then, Neal [Vitale] came in with private equity backing ... and made b-to-b deals to buy 101communications [and Stevens Publishing]. Neal had been looking for thee or four years to find the properties to get started, but the time wasn't right. In 2007, these guys have been through the worst and have come out the other side. Prices are firming for properties, and there's a lot of pent-up supply.
MB: How has the influx of private equity money affected b-to-b media? And what do you see that's different between now compared with, say, 2000?
Edmiston: Private equity has changed the whole dynamic. There aren't really strategic guys out there making acquisitions. It's not too dissimilar to other media in that private equity is making more of the deals this time. … [Unlike 2000], you're not seeing the valuations go nuts. People are making value judgments that are supportable and [they] can actually run a business on.
MB: Will strategic players continue to focus on niche properties, or do you see them pursuing big-ticket deals this year?
Edmiston: Niche properties. I don't think you're going to see them going in with both feet because most of them are still addressing two things. One is becoming more focused, so you'll see bigger guys divesting properties that are not strong. They're going to follow the Jack Welch mantra: If you're not 1 or 2 in the business, get out. The second is adding assets that will give b-to-b media companies 360-degree coverage in the areas they're strong in.