Wednesday, September 19, 2007

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


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