Wednesday, May 5, 2010

Business Media still constrained by legacy

We know now what the future for many business magazines will be. Many observers are surprised that the big behemoths of business media have not been more active in disposing of a tail of assets. As the business media offering gets more complicated most media companies are hunkering down around the markets where they think they will be best able to succeed, judging that competing to win in multiple markets is more difficult the more markets targeted.

When the sale of RBI was aborted it wasn't long before most of the titles in RBI USA were slated for sale. More than a year later the process is almost complete with an annoucnement just a few weeks ago that 22 titles had not been sold and would be closed. Since then a number have been sold to management. What might we conclude from this? An article in Folio magazine postulated that there was never any real effort to sell to trade buyers. Why? Well Reed might have judged that they had milked all the profit they could from these titles, but because of the contingent liabilities - especially redundancy costs, that the samll consideration they were likely to get would be wiped out when the buyers realised this. Better to threaten to close the titles and let the management take them away for a song and take their expensive contracts with them.

In the UK the liability problem is worse. It is possible that the likely value of many of the mags, once the liability issue has been netted off, is negative. Expect to see Reed hanging on to titles unitl the profit runs out and then selling them off one by one if the management teams can be persuaded to take them.

Many other business media companies have a similar problem. Values for magazines are low, and falling. Profits are still declining and there is little sign of a meaningful growth in print advertising. As Elvis used to say, we are all in a trap.

We started this blog four years ago urging comapnies to be braver else the world would get worse and worse for them. In july of that year we said,Are business media companies moving fast enough to adapt to this new world? The answer is no, but there is still time - just.

Most were not, so it has. Moving quickly to ceate th business you want to end up with remains thechallenge. The slow death strategy is demoralising for the business and worsens the prospect for a successful long term outcome. I just scared myself by reading this blogs archive posts from june and July 2006. Horribly prescient.

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