Its a Bit of a Bain, but there is only one bidder left for RBI

The Telegraph reports that only Bain Capital remains in the bid process for RBI at a bid of around £680m - around half the original price. The article also speculates that the proposed deal involves an earn out (ie deferred consideration) and a lock in for key executives.

As gifted as they are, the radical surgery and rethink needed in RBI is not best solved by managers who have been there 25 years. Earn outs are always messy and Reed Elsevier will be reluctant to tie themselves into future consideration over which they have no control.

Bain will consider that either they will have got RBI on the cheap, or by the time the earn out kicks in, the financial markets will be looser and raising funds will less of an issue.

I have no idea whether he is involved in the deal, but a Bain Consulting senior guy is one Graham Elton who was briefly CEO of Miller Freeman UK (now CMPi/United Business Media).

The odds of the deal closing are getting longer. There is every possibility of a withdraw before Christmas.

Deal or no deal, vicious cost cutting will follow rapidly in the new year.

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• Bain Capital in driving seat for RBI

Never Mind the Strategy Lets Reorganise the Management Team

Well, it no longer matters whether Gary Hughes, the CEO of CMPi has or hasn't understood what to do next as we were postulating a couple of weeks ago. He has been fired. Well, made redundant. CEO of UBM, David Levin has split the CMPi business into four chunks, just as he did with the CMP business in the USA, with the heads of each reporting to him directly. So thats four direct reports from the US, five from the UK (I'll come back to why its five) plus his head office reports which must at least include his CFO plus the Asia business. When I went to school we were told that you should never have more than six direct reports. I reckon Levin must have north of ten direct reports. That's a tough and some would say disfunctional structure.

But does this make any real sense? Go back a hundred years and Morgan Grampian/Miller Freeman, the precursor to CMPi, used to believe in "market focus". In his recent interview with Press Gazette, Hughes said,

"We like markets rather than media formats. We like to be in markets and then work out how to make money in that market rather than say here are magazines and websites, [now] make money even though you have no face-to-face assets.” A bit of a bugger than he hadn't understood the implications of his boss's change to the structure of the US business.

Serve the market. Customer first, product second is the mantra of the market focus advocate. There is a bit of this left with all the Built Environment assets grouped together under Jonathan Newby. Then there is a conference division, which is mostly events and some publishing; the Live Media Division, which is mostly events, and then there is the rest of the publishing stuff which includes Music Week and Daltons Weekly run by the CMPi CFO. No mention is made of Publican or TTG, which seems odd.

So what if Music Week wants to run a conference, where would that fit? What if an exhibiton idea evolves from a conference? Where is the focus on digital and who will make that happen? Remember my turkey analogy?

There has also been speculation that UBM, flushed away from the proposed merger with Informa, is a candidate to buy ITE and/or Centaur. Now that is interesting in that ITE is an events business with most of its activity in Eastern Europe, so it fits. Centaur has seen its market value collapse despite growing profits. It is now worth less than 5 times its EBITDA. No doubt Centaur execs think this is unfair, but there has been little revenue growth of late, they are very exposed to the advertising cycle and if they have a strategy it is hard to discern.

An irony in the history would be that Graham Sherren, founder of Centaur, was the MD of Morgan Grampian, which became Miller Freeman, which became CMPi. In fact so was his Dad. Also Centaur owns The Engineer which was sold to Centaur by CMPi (then Miller Freeman) some ten years ago.

Running on the Spot

When you take Tim Weller away from talking manifest tosh in his capacity as a leading light in the PPA, he can be persuaded to talk some sense. Contrast this interview at e-consultancy with the feeble speakings of his rival at CMPi we reported on last week.

Weller says some of the stuff that everyone says - we must do online and print and events; but what is interesting is his level of detailed grasp of what needs to be done with the business. Weller rightly argues that magazines have to change to survive in the online world. They need to be more like The Economist he says, which has thrived in an online world because of its thoughtful and analytical approach.

He rightly argues against what he calls brochure ware in web sites - lazy and pointless papering of the web with ill thought through content - and is honest enough to admit that some of his sites are not very good. He advocates muliple models to make online work - not just selling ads - which is really hard to do in b2b, but also lead gen, recruitment, search, data and workflow.

If we were being critical we might say that doing everything isn't a strategy. Real strategy is about deciding what you don't do. However in a world were the certainties of the business model of the past have unravelled, I'd rather back a plan which was too innovative than one which was hoping it will all turn out all right in the end. Too many business media execs are running on the spot. and hoping for Jam tomorrow. Wellers enterprise may struggle (he has far too much print product in my view) but he will do better than most of his rivals if only because he is running forwards.

So We Said Thank You for the Music Week

The definitive trade mag for the music industry, Music Week, is firing journalists both online and offline and, according to Press Gazette, running without a news desk - which is tough for a news weekly! The title is loss making. How the mighty has fallen.

In the late nineties Music Week spawned early online consumer music web property dotmusic. It couldn't find an economic model, refusing to play dirty by allowing downloads, and was sold by United Business Media for chips. A missed opportunity for sure.

Having tried unsuccessfuly to sell the trade mag a couple of years ago, CMPi now finds itself with no profit in the magazine and no online business either.

Is this the future for business magazines, revenue collapse, cut costs, run out of profit, fire the remaining journos and then close the magazine. Grim.

UBM is an Exhibitions Company Shock

While on the subject of UBM we should note their interim results. I'll translate. 70% of profits come from events. UBM is an events company then - not a publishing company. £20m of profit was eliminated beacuse fo the weak dollar - UBM are very exposed to this. Publishing continues to decline and not to much mention is made of electronic and digital profits to come.

UBM enjoys a rating as a business media player. In truth it is an exhibition organiser with a bit of pubishing going on.

Will the UK CMPi business survive? I'll bet that som thought is going into a review of its future. With focussed CEO action on CMP in the USA (see report below) and almost all the profit coming from shows and conferences, I doubt that the magazine and publishing business will stay long in UBMs ownership