FT to be sold off in five years time and more sales

Since the demise of VNU Publishers and the change into The Nielsen Company, the former VNU CEO, Mr Rob van den Bergh had hardly been seen on stage to tell the story about the change of a traditional publisher into a data company. I was very eager to hear his presentation The Case of VNU Publishers, when I read about the conference on Publishing in the Digital Age, organised by two Master Programmes (Book and Digital Media and Journalism and New Media) of the Faculty of Arts of Leiden University.

In his presentation he addressed the turn-around of VNU Publishers in general term, placing the development in a larger publishing framework. In the eighties VNU was a publishing conglomerate serving the consumer, educational and professional market with a wide package of products ranging from magazines, books, newspapers and online database. By the beginning of the nineties a strategy to become a professional information provider was developed, but this meant a complete turn-around of the conglomerate. The book division was sold off. After that VNU disinvested in the newspapers division, the magazine division and the education division. The Board foresaw that newspapers would be a losing division as it was an inflexible industry with not much sense for commerce; besides the revenue stream diminished on the subscription and the advertisement fronts. The magazine disinvestment was an emotional one, as most people knew VNU Publishers from the range of magazines from cradle to grave.

By the mid nineties, VNU saw that internet was a global operation, which pushed aside local players. Monsterboard became a global player in the recruitment market. E-Bay and its local subsidiaries such as Marktplaats took a large part of the market share of classified ads. So the basic revenue sources of consumer publishers slipped away.

He sketched the activities of the various big consumer publishers. Towards the end of the nineties the traditional publishers and the new publishers seemed to meet. Time Warner merged with AOL and divested in books. Disney picked up digital publishing companies.
On the other hand News Corporation took another approach. He does not believe in focussing, but in combining newspapers, cable and internet. Bertelsmann is a traditional publisher which combines print, music and television and has book clubs.

Pearson seems to have another diversified strategy. It is still successful, especially in education according to Van den Bergh, but he would not be surprised when the Financial Times would be sold off in five years time.

To Mr Van den Bergh these examples are proof that the strategy of VNU going for the B2B market was the right one and that the players active in this market are now focussing sharper. He pointed out that Reed Elsevier was successful in scientific publishing in print and online, but he predicted that the business publishing division will be the first division on the list to be sold off after the educational division. Thomson had sold off its educational division to concentrate on the financial information market, buying Reuters.

He also pointed to the influence of private equity. Kluwer Academic and Springer had been sold to private equity and merged. All the big companies (Reed Elsevier, VNU Publishers, Wolters Kluwer and Thomson) had sold off their education divisions and had sold them to private equity, awaiting consolidation.

He stopped short of pointing to VNU Publishers when it was on the brink of concentrating on market data with Nielsen; but the shareholders blocked the board in acquiring MSI and forced the board to sell off its business publishing activities.

At the end of his presentation, Mr Van den Bergh offered ten predictions:
1. From local to global; local site might be popular but will be overtaken or acquired by global sites; see the social networks;
2. There is a quick decline of the newspaper and the magazine industry;
3. The task of the journalist will change;
4. Specialist sites will generate revenues;
5. The music industry has had the worst problems in the content industry with regard to copyright;
6. Innovations do not come from large companies;
7. The content industry gets complex, so focus is needed;
8. New players enter the game and can move fast without legacies;
9. Education divisions have been sold off by big companies and so will B2B publishing companies;
10. Advertising online will increase at great speed over the next five years.

And just for the record, Mr Van den Bergh, forecasted the sale of the Financial Times by Pearson within five years and the sale of the B2B publication division by Reed Elsevier.

Blog Posting Number: 872

Tags: publishing

Flash: Approval German state aid to search engine project

A year ago Europe represented by Germany and France were going to put up a battle with Google. Plans for a European multimedia search engine were put on the table. But even before the plans left the drawing tables, there was a split. The Germans and the French could not agree on a common strategy. So Germany went its own way and started up the Theseus research project and France went the Quaero way, aiming to develop the most advanced multimedia search engine worldwide, which would translate, identify and index images, audio and text; in short the TGV under search engines. And the projects are still alive. Having supported the Theseus project, the German government asked the European Commission to approve state support to the tune of 110 million euro and it did so.. This should keep Siemens, SAP, Thomson and Empolis, a Bertelsmann subsidiary, going. France is also likely to shell out state support to the tune of 75 million euro, but has not reached an agreement yet with the European Commission.

Tags: search engine

Educational publishing consolidating for a new future

This week Reed Elsevier announced that it will get rid of its loss leader, the educational division. The company wants to concentrate on medical, scientific and business information. Reed Elsevier wants to pay the revenues of the sale, estimated on 2.4 to 2.9 billion euro to the shareholders. Reed Elsevier is the third publishing company, after Thomson and Wolters Kluwer, putting up the educational division for sale; VNU sold its educational division Malmberg to a private investor at an earlier stage. In the meantime HM Riverdeep in Ireland, the investment vehicle of Barry O'Callaghan, ponders about an offer of 2,78 billion euro.

It is interesting to see that all big publishing companies at a particular stage want to get rid of their educational division after that they have abandoned the newspapers and the consumer publishing divisions. The three companies, originating from The Netherlands, VNU, Elsevier and Kluwer all followed the same strategy, be it on different times. In 1980 they all three declared that they would start the internationalization process and they did. Kluwer, not yet part of Wolters Kluwer got first rid of the newspapers, and followed by Elsevier and VNU. After that the consumer divisions were sold; first Kluwer did away with consumer books and magazines, then Elsevier followed by VNU, selling the magazines to The Finnish company Sanoma.

By the turn of the century the three companies were not all clear about the ideal company. VNU never made a secret of the fact that it wanted to change from publisher to market data provider. Now VNU has changed into Nielsen Co. and sold its European business publications division VNU BME to 3i. But Wolters Kluwer wrestled with internet and the future direction; it sold off Wolters Kluwer Academic. The ideal would be Legal and Accountancy and business publications; in that order. Reed Elsevier was striving after medicine and scientific information and business publications.

The newspaper and consumer move left the companies with educational, scientific and business information division. The sale of the educational division was a question of time; the educational division was sold to the British venture capitalist 3i. Recently Wolters Kluwer put up it educational division. Now Reed Elsevier follows suit. And at the other side of the pond, the Canadian publisher Thomson has also put its education division in the window.

The future of the educational divisions is unclear. The former VNU educational division Malmberg has been bought by a private investor, most likely to sell it on. HM Riverdeep wants the Reed Elsevier educational divison to put Houghton Mifflin and Harcourt Education together. The other companies are still in the process of selling the divisions and they most likely will also be bought by venture capitalists as the potential buyers are publishing companies, which are not international or not financially strong. So, the venture capital companies will perhaps break up the divisions and try to sell them nation by nation. This would be analogue to the making of the German Springer company. The academic press Springer was sold to a venture capitalist as was Wolters Kluwer Academic; now they have merged and are operating as Springer.

After a consolidation, the educational divisions in whatever shape or form will get a new future.

Blog Posting Number: 667

Tags: educational publishing