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Aug 18, 2008

Reed Business' Auction Enters Second Round; McGraw Hill In Serious Contention; Nielsen Interested?

Reed Business' Auction Enters Second Round; McGraw Hill In Serious Contention; Nielsen Interested?

Reed Business Information, the B2B magazine unit of Reed Elsevier (NYSE: RUK), is moving closer to sale, as the bidding enters the second round, after about 12 bidders in its first round. UBS, the bank for RBI, has invited McGraw-Hill (NYSE: MHP), the parent of BusinessWeek, and PE firm Bain Capital, among others, to continue. The first round valued the company between $1.87 billion and $2.33 billion, reports WSJ...most of the offers were bunched around the mark, so most of the first round bidders will continue into the second. Other bidders include Providence Equity Partners, Apollo Management

For McGraw-Hill, it has submitted a joint bid with PE firms firms Advent and Quadrangle, TPG and DLJ Merchant Banking together, and Cinven and Candover, also together. Meanwhile, interestingly, Nielsen, which owns Billboard and The Hollywood Reporter, has also shown interest in RBI, reportsTelegraph, though not clear if it submitted a bid. This as rumors continue on its own business media unit being up for sale. Check our RBI section for the progress of the sale process.

Reed Business Sale Expected As Early As October; Gruner & Jahr Now Interested

Reed Elsevier (NYSE: RUK) expects the sale of its Reed Business Information trade magazine unit to complete as early as October. In a memo seen by Dow Jones, Marianne van Leeuwen, CEO of the Holland operation, says bids were made for RBI "since last week". "In the first three weeks of September, the global board of Reed Business will give a management presentation to potential acquirers," Van Leeuwen wrote, though she said she did not know who the buyers would be.

BusinessWeek publisher McGraw-Hill (NYSE: MHP), private equity house Bain Capital, Providence Equity Partners and Apollo Management have been linked with bids, while Billboard publisher Nielsen was also linked. In half-year earnings last month, Reed Elsevier reported "strong buyer interest" in RBI. This means we will have a new owner of Variety very soon…

Updated: Reuters reports that German publishing giant Gruner & Jahr is interested in buying the division, citing a German newspaper report...the company exited the U.S. market in 2005 after a disastrous foray buying FastCompany and launching the Rosie magazine. It sold its women's magazine portfolio to Meredith (NYSE: MDP) and its business magazine portfolio to Mansueto Ventures. 

Topic Pages to Be Hub of New BusinessWeek Site

Published: August 17, 2008

With advertising revenue sliding, publications try a lot of things online to get noticed, like — pardon the jargon — verticals, aggregation, user-generated content, popularity rankings and even something resembling social networks.

Chester Higgins/The New York Times

BusinessWeek’s online editor, John Byrne, left, and senior vice president, Roger Neal, with a Business Exchange prototype.

BusinessWeek magazine is about to introduce a site that combines some elements of all of the above in ways intended to capture new readers and funnel them into niches that will attract advertisers.

The site, called Business Exchange, is one approach to the fast-evolving digital world, where some news sites that experiment have rapidly expanded their audiences while those that do little more than post articles online have been left in the dust. After two years of quiet development, it will go public in late September, accessible through BusinessWeek’s own Web site (www.businessweek.com).

The core of Business Exchange is hundreds of topic pages, on subjects as broad as the housing market and as narrow as the Boeing 787. Plans call for the number of topic pages to grow quickly into the thousands. (The first one created, which may or may not be in the public version of Business Exchange, was “BlackBerry vs iPhone.”)

A few other magazines and newspapers have also become serious about building verticals, but they tend to jealously guard control of their online audiences and content. Not this one.

Each Business Exchange topic page links to articles and blog posts from myriad other sources, including BusinessWeek’s competitors, with the contents updated automatically by a Web crawler. Nearly all traditional news organizations offer only their own material, spurning the role of aggregator as an invitation to readers to leave their sites.

On Business Exchange, a user can post new material to a topic page, or even create a new page, choosing the subject and the title, and write a brief introductory description. This is hardly a revolutionary idea in the wiki era, but for a mainstream publication, it represents a significant loosening of control. (But not too loose — new topics require editorial approval, promised within 24 hours, and objectionable posts will be taken down.)

“As journalists, we’re good at finding great sources of information and distinguishing what’s important, but we also want to harness the very significant capabilities of our community,” said Stephen J. Adler, editor in chief of BusinessWeek, which is published by the McGraw-Hill Companies. “It only takes a very small percentage of people being active in a topic for it to be really vibrant and valuable for everybody else.”

The site also works as a kind of social network, letting friends, colleagues and rivals track one another’s interests — or, say, Warren Buffett’s interests, if he chooses to play along.

Each user has a profile (photo optional) that contains a personal description and tracks the user’s reading and posting habits. It allows the reader to create a network among other readers, and to import information from a LinkedIn account.

The user can also choose to make the profile public, with all of that information visible to anyone on the site.

Through the topic pages and profiles, BusinessWeek hopes to be able to deliver narrowly focused audiences to narrowly focused advertisers, and even let the advertisers know who those readers are.

“Advertisers want you to prove engagement,” said Keith Fox, president of BusinessWeek. “Ordinary social media are too broad to draw ads, but we can sell display ads reaching a specific audience on electronics or cars or medical devices.”

BusinessWeek wants to stand out in a crowded lineup of news sources on businesses, financial markets, the economy, and personal finance and investing.

In print, BusinessWeek has a circulation of about 900,000, similar to Forbes and Fortune, which publish half as often. (The other top-selling financial magazines, like Money, Kiplinger’s Personal Finance, Smart Money, Fast Company and Inc., do not compete as directly. They are all monthlies, some focus primarily on personal finance, and they tend to have fewer ads or online readers.)

In both print ad sales and online traffic, BusinessWeek ranks far ahead of most other financial magazines, but lags behind its closest competitors. Its Web site draws more than three million unique visitors monthly, according to Nielsen Online, a healthy figure, but Forbes.com gets more than eight million. No directly comparable figure is available for Fortune, whose online presence is contained within Time Warner’s CNNMoney site, with more than nine million monthly users.

In the first six months of 2008, BusinessWeek had more than 900 ad pages, according to the Magazine Publishers Association, while Fortune had more than 1,100 and Forbes more than 1,300. Though print sales have held steady, financial magazines have lost more than 20 percent of their print ad volume in the last four years, and BusinessWeek’s advertising has fallen even faster.

Roger W. Neal, senior vice president and general manager of BusinessWeek Digital, said that as Business Exchange pages work their way up through search engine results, the site should double BusinessWeek’s traffic on the Web within two years, allowing it to sell more ads.

“Increasingly the ad buy in our sector is going to that top tranche of players,” he said, “so we want to get dramatically bigger.”

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