They're back - Verenigde Nederlandse Uitgeversbedrijven B.V - Cover Story

Folio: The Magazine for Magazine Management, June 1, 1994 by Lambeth Hochwalk

VNU's purchase of Hasbrouck Heights, New Jersey-based Hayden Publishing Co. was--by most accounts--an unmitigated disaster. Within two years of the December 1986 purchase, the company was sold outright and its two launches folded.

While VNU has not had a U.S. presence in magazines since then, VNU (in English, its initials stand for United Dutch Publishing Co.) has dominated the media information market through BIS, its New York City-based Business Information Services subsidiary that, according to a September 1993 financial statement, experienced revenue growth of 7 percent last year. The U.S. division accounts for $155 million (12 percent) of the parent company's revenue, and includes such holdings as Claritas Inc. (geodemographic data); Scarborough Research (qualitative audience measurement); and Interactive Market Systems (data enhancement services for media planning). Competitive Media Reporting is owned jointly by VNU and rating firm Arbitron, and includes the Rome Reports and Leading National Advertisers (LNA), both of which tract ad pages and spending. VNU also owns Disclosure Inc., a financial information data service, and in April acquired Advertising Products Group (APG), with four product lines catering to the pre-buy, buy and accounting needs of advertisers and agencies.

From an information services point of view, then, paying $220 million for New York City-based BPI Communications Inc. early this year makes sense. After all, its business information services include Billboard Information Network, Broadcast Data System and Adweek News Wire. But the buy also means integrating BPI titles such as Billboard, The Hollywood Reporter and Adweek--three of the 19 titles that contributed to BPI's estimated total revenue of $130 million last year.

At home in the Netherlands, VNU is the largest publisher of mass-circulation women's consumer magazines and regional newspapers. It also publishes more than 100 consumer and special-interest magazines across Europe, including Belgium, Italy, Spain, the U.K., the Czech Republic, Hungary and France. VNU's broadcasting interests, databases and educational publishing division contributed to last year's worldwide revenue of $1.2 billion, putting it on a par with international giants such as Reed Elsevier.

So why push into the United States? "VNU is as big as they'll be in Holland," observes George Green, president of Hearst Magazines International in New York City. "Sure, they're a big fish in the Dutch market. They recognize their own limitations and they're looking to the U.S. as another business platform--it's global expansion." Green sees VNU actively tying its U.S. properties with BPI's core strengths. "They're not paying all that money because they're unhappy with its prospects," he says. "They want to be part of its future."

Haunted by Hayden?

Of course, that was the intent the last time around, too. In fact, VNU said some of the same things about its long-range plans after its $40 million purchase of Hayden, a company that was established in 1952. Then, the idea was to dominate the computer and electronics area, with such titles as Personal Computing, Computer Decisions, Electronic Design and Microwaves & RF. VNU believed Hayden would be a natural tie-in, a beachhead in its plan to spin-off and acquire related properties.

"The reason VNU acquired Hayden was not to run the properties," says Robert J. Lydon, CEO of the U.S. division under VNU. "VNU's plan was to use the company as a stepping-stone." What stood in the way, though, was the fact that the Hayden titles had been declining for years. Then, too, there was intense competition from heavy-hitters Cahners, IDG, Ziff-Davis and McGraw-Hill.

Another impediment was VNU's dispute with Hayden founder, James S. Mulholland Jr. Mulholland ended up suing VNU in 1988 over $17 million that the company was withholding. "VNU alleged we didn't tell them that the computer market would decline in 1987," says Mulholland, currently an investor in Westport, Connecticut-based Mecklermedia Corp. "Yet VNU was publishing more computer publications throughout the world than anyone else, except, perhaps, IDG." Two years later, the lawsuit was settled for an undisclosed amount, which Mulholland says was less than contractually owed.

Meanwhile, by late 1986, about the same time VNU formed its U.S. business information services division, the Hayden titles were indeed facing increasingly turbulent financial times. Electronic Design, Hayden's flagship biweekly, had already lost its long-time lead over Cahners' Electronic Design News. The Gold Book, an annual directory that went to Electronic Design subscribers, had never made a profit, either. Meanwhile, ComputerDecisions, a biweekly for data processing managers, and Personal Computing were faltering, in part because of a three-year recession in the computer industry. "VNU bought an impression of Hayden that had already lost its luster," says David Allen, former publisher of Electronic Design, now publisher of PennWell Publishing's Computer Design.