Magazine Marketplace: A highly selective industry chronicle

Folio: The Magazine for Magazine Management, Nov 1, 2003

THE DEALS

Deal volume may be increasing, but the magnitude of transactions is stills small.

"The lack of big [consumer] deals is the biggest change in 2003 over last year," says Reed Phillips, managing partner at DeSilva & Phillips. Talk of large transactions are at a high pitch, he says, but action lags behind. "There's a lot of discussion, but not results."

[Larger deals] seem like a long time in coming," agrees Andy Buchholtz, managing director at Veronis Suhler Stevenson. "Last year, there were nine significant consumer deals and only one so far this year - if New York doesn't get done."

Buchholtz attributes the molasses-like pace to a variety of factors, among them a greater degree of due diligence. "The process is taking longer. No one is taking big risks." Both Buchholtz and Phillips believe this quarter could bring some sizeable deals. "There won't be an avalanche, but the pent-up demand will likely come to fruition," says Buchholtz.

On the b-to-b side, the quality of recent transactions portends an even greater rejuvenation of M&A activity, says Kathleen Thomas, managing director at Berkery Noyes & Co. "The trend I see is that [b-to-b] buyers have stabilized and will pay the valuations necessary to win the quality they need to drive their growth goals."

Thomas points to Advanstar Communications' purchase of Thomson Healthcare. " Not only was the multiple attractive, but it signals that strategic buyers are back in the game, and aggressive." Startup Highline Media's acquisition of the National Underwriter Company, is significant, too, she says, "because it shows that private equity firms can get attractive b-to-b deals done in the face of tight credit markets." Meaningful signs of life, however, are not limited to sizeable transactions. - Lorraine Calvacca

ZIFF DAVIS BUYS CONFERENCE DIVISION

Resurrected tech publisher Ziff Davis is getting back in the conference business - its first new acquisition since the company was sold by Softbank to Willis Stein & Partners is TM Media, a New York-based events marketing company led by former IBM and Microsoft execs. Terms of the deal were not disclosed, but the transaction includes TM Media's four staff members, intellectual property, and a schedule of four events in 2004.

The acquisition marks the creation of a new business unit, the Ziff Davis Event Marketing Group. "This is a new platform for the company," says Ziff COO Bart Catalane. "It's our first deal."

The addition of conferences is another step in rebuilding a company that was dismembered in 2000 when Softbank sold it off in parts. It allows for the kind of face-to-face and lead-generation opportunities that tech advertisers are demanding from business publishers, and that most of Ziff's competitors already have.

But TM Media cofounder Jim Hasl says Ziff Davis' conference division will be built from the ground up to address new market realities, particularly the desire of marketers for narrow, more targeted shows measured in number of sales leads delivered, rather than square footage covered. Clearly, Ziff won't try to reinvent Comdex, PC Expo, or CeBit. "The industry is going from broad to narrow," Hasl says."We're going to build with a blank sheet of paper."

The events will be branded Ziff Davis and may include tie-ins to Ziff publications eWeek, CIO, Insight, Baseline, and PC. Despite Ziff's troubles and those of the tech sector, its brand name should be a plus. Says Adam Schaffer, publisher of Tradeshow Week: "Tech people feel comfortable with the name. It's warm and fuzzy." - Michael Learmonth

PRIMEDIA SALES

In its bid to pay down debt and focus on its core magazines, Primedia (publisher of Folio:) continues to sell off non-core properties. Simba Information was acquired by R.R. Bowker, a unit of the privately owned Cambridge Information Group. Simba Information provided market intelligence, business forecasts, conferences and educational forums to the media industry.

Primedia's KITPLANE has been sold to Greenwich, Connecticut-based Belvoir Publications, Inc. The 25-year-old Greenwich-based publisher produces 30 special-interest magazines, including John Lyon's Perfect Horse, Heart Advisor, and Practical Sailor.

Finally, Primedia has agreed to sell Cable World to PBI for an undisclosed amount, demonstrating that a hard-hit strategic buyer is back in the game. - LC

THE DEVELOPMENTS

IS IT CURTAINS FOR FREE CONTENT?

The best things in life, arguably, are free, but that's starting to change when it comes to the Web. A study released by the Online Publishers Association in late September revealed that consumer spending for online content in the U.S. grew to $748 million in the first half of 2003, an increase of 23 percent over the same period last year. While the market is relatively small, it's indicative of steady growth and a shift in consumers' mind-sets.

"The OPA studies [support the ] evidence that people have increasing comfort levels for paid content online," says Doug Harrington, CEO of Keepmedia, a four-month-old subscription-based aggregator of print media content.