Cardinal Business Media under construction

Folio: The Magazine for Magazine Management, June 15, 1994 by Lambeth Hochwald

A new, innovative trade-publishing partnership has created a powerful company in a spectacularly short time. But is it built to last?

At Cardinal Business Media, creating the company was like building a skyscraper in record time--there was nothing gradual about it. In less than two years, Cardinal has acquired mid-size trade publishing company status, with 16 magazines in five categories, two book companies, three trade shows and revenues of about $50 million.

Since September 1992, Cardinal--backed by a giant venture capital fund from Los Angeles-based Brentwood Associates and directed by trade-publishing veteran Robert N. Boucher Jr.--has acquired six companies. And as one of the newest contenders in the trade-magazine arena, Horsham, Pennsylvania-based Cardinal is unencumbered by an entrenched corporate structure and has the chance to create a new model for trade publishing. Essentially, the company's mission, as defined by Boucher, is to acquire strong market performers and create a diversified, recession-resistant firm with revenues of $100 million within 18 months.

Its principals say they're on track to meet those goals. "When we first embarked on Cardinal, we thought that the media had been beaten up by a lot of financial people," says David Wong, a Brentwood general partner. "There were a lot of over-leveraged deals in the eighties, and we saw a lot of core franchises in the trade area with magazine leaders we thought would succeed."

Adds Boucher, "We look for market leaders. We're not in the business of bottom-fishing--we're looking for publishers who have their eye on what's happening down the road."

However, as a brand-new company, Cardinal faces challenges associated with rapid growth, including overextended management, misjudgment of markets, and the need to develop a positive and supportive corporate culture.

In Boucher, 47, Brentwood has as a partner a seasoned publishing pro who served as CEO of the former Gralla Publications and later as president of San Francisco-based Miller Freeman Inc. But running an existing company is quite different from simultaneously building a new company. And while there is a recent trend toward venture-capital migration into magazine publishing--including trade-magazine acquisitions by such financial backers as Boston Ventures, Goldman Sachs, Sandler Media Group, Morgan Stanley and Golder, Thoma & Cresey--some wonder whether Brentwood's ultimate plan might be either to cash out of Cardinal altogether through a sale, or take the company public.

Ultimately, that decision--and Cardinal's success--will be based on the same criteria all trade-publishing companies are judged on: its financial performance; its creativity and aggressiveness in establishing itself as a market leader and critical-information provider; its internal structure and culture; and its choice of markets. Many industry observers are watching closely to see how Cardinal positions its mix of magazines and trade shows to maximize the properties' long-term growth possibilities. But since its first purchase in September 1992, Cardinal has edged into some problematic markets, has had to fold one magazine, and has seen advertising performance decline in several others. Cardinal's five market categories include high-tech, music/entertainment, sports/fitness, retail and visioncare. Boucher envisions Cardinal remaining primarily focused TABULAR DATA OMITTED on those five markets and hopes that each acquired company can run as a relatively autonomous entity. "We believe diversity is a good thing," he says. "It keeps a company from being dependent on the fortunes of one industry. We want to be in a number of different areas that are driven by demographic trends and share the characteristics of growth and resistance to recession."

Cardinal's rapid creation

To launch the company, Boucher sought a high-tech platform and found it in the form of Professional Press, Inc., a Horsham, Pennsylvania-based publisher that Cardinal bought out in September 1992. With such vertical computer titles as DEC Professional, HP Professional (and a European edition launched last year), Midrange Systems, LAN Computing and Digital Systems Journal, Professional Press, founded in 1981 by two computer analysts, had annual revenues of about $20 million.

Three months later, Cardinal acquired Dallas-based Thomas Publications Inc., a publisher of four vertical controlled-circulation computer technology titles, including Enterprise Systems Journal, Unisphere, Relational Database Journal (formerly DB2 Journal) and IBM Internet Journal. Cardinal also acquired Thomas' Enterprise Expo, a trade show for IBM systems users that it has since promoted in all the related computer magazines.

In April 1993, Cardinal added Sportscape Inc., a Framingham, Massachusetts-based publisher of Club Industry and Rehabilitation Today, with total revenues of about $5 million in 1992. The purchase also included Sportscape's two trade shows, the Club Industry/Rehabilitation Today Show, held in New York City, and the Club Industry Show, which is held in Chicago.