Reed plans sale of Variety, other trade publications


UPDATED 3:34 p.m. PT Feb. 21

Reed Elsevier said Thursday that it plans to sell its business-to-business magazine division, which includes such media and entertainment industry titles as Variety, Broadcasting and Cable, Multichannel News and Publishers Weekly.

The Anglo-Dutch company said the move is designed to reduce its exposure to the volatile advertising market as it rejiggers its holdings to focus on databases and other businesses.

The news came as Reed Elsevier -- which in many areas competes with the Nielsen Co., the corporate parent of The Hollywood Reporter -- unveiled a $4.1 billion acquisition of ChoicePoint, a provider of information services for the insurance industry, which is seen as fitting in with Reed's LexisNexis property.

While the credit markets' difficulties have held back private-equity deals in recent months, business-to-business publishers have reduced costs and have pushed into the digital space, making this a potentially good time to explore a sale, industry analysts say.

During a conference call, CEO Crispin Davis said no timetable for the start of sales talks has been set. Strategic buyers as well as private-equity groups are expected to take a look at Reed Business Information; estimates peg the division's worth in the neighborhood of $2 billion-$2.6 billion).

"We value the unit at $2.6 billion, and private-equity funding for this size deal is still available," UBS analyst Polo Tang said.

Several PE firms and Nielsen declined comment on possible interest in all or part of RBI.

Davis said he wants to hold on to the exhibition business that Reed runs with the RBI publications, given strong growth in this area.

Reed Elsevier said the planned sale of RBI is aimed toward "reducing exposure to advertising markets and cyclicality" as it concentrates instead on subscription-based information and other offerings. It follows the recent sale of its education division.

"RBI is a well-managed high-quality business as evidenced by the success of its online growth and the control of costs," Davis said. "Its advertising revenue model and the inherent cyclicality fit less well, however, with the subscription-based information and work-flow solutions focus of Reed Elsevier's strategy."

On sale are various trade brands in the U.S., U.K. and other parts of the world covering such sectors as media, agriculture, banking, health care and science.

Also Thursday, Reed reported a 2007 profit of $2.35 billion, nearly doubling 2006 earnings. Revenue for the year rose 1.7% to $8.99 billion. The company also announced a cost-reduction program set to save it $480 million by 2011.