Said to be off-limits, Variety has been quietly made available as its parent company struggles with debt
Variety is up for sale after all, according to several people with knowledge of the dealings.
Owner Reed Business Information — which insisted as recently as July that it was not putting its top title on the block — has been quietly dangling Variety before potential buyers for some time, according to at least five individuals. They include former and current RBI employees and people in the mergers and acquisitions community familiar with RBI's thinking.
RBI's British/Dutch parent, Reed Elsevier, is under pressure to sell its magazines to get out from under a huge debt load. But when RBI announced in July that it would sell off its magazines piece-by-piece, it said it was planning to keep Variety, its crown jewel.
Reed Elsevier has since changed CEOs. Ian Smith left the company in November after just eight months in the position, and was replaced by Erik Engstrom.
It’s not clear how long Variety has been available.
Through a representative, RBI declined to comment. The Jordan, Edmiston Group, the company that is handling RBI's titles sale, declined to comment. John Poulin, RBI’s chief executive, did not return e-mails seeking comment.
Reed put Variety and the rest of RBI up for sale close to two years ago, but took the publishing unit off the block near the end of 2008, when bids were said to have fallen from approximately $2 billion to $1 billion.
In the months since, Variety has experienced a disastrous decline in ad revenue, and has weathered a wholesale loss of talent; its most recent departure was veteran film reporter Mike Fleming, who left this week for Deadline.com. Even Variety's website has seen declining traffic, and that was before it went behind a pay wall in December.
On New Year’s Eve, Poulin sent a memo to update staffers about its ongoing sale process, and to warn them that the first half of 2010 was not going to be pretty.
“We have not been able to sell the business as a whole,” Poulin wrote, “and this unfortunately will result in title closures and job losses across the business during the first half of the New Year. I know that this will come as a major disappointment but reflects the impact of the structural changes in our markets, accelerated by the recession.”
Last week, RBI shuttered the 26-year-old Video Business.
Poulin added that the company is in “advanced discussions to sell a number of titles to separate purchasers and, if these are satisfactorily concluded, expect to make announcements on these sales in the next few months.”
It’s not clear if the 104-year-old Variety is among those titles, but according to an M&A source, it was included in RBI’s attempts to “sell the business as a whole.”
According to one of the M&A sources, “everything is for sale.” Another M&A source said at least two suitors have approached RBI about acquiring a group of titles — including Variety — but that RBI may ultimately opt to hang onto the title because the incoming offers are thought to be too low.
"The problem for RBI is that buyers perceive it as a fire sale, and buyers generally look at b-to-b and trade print titles as toxic assets," the person said.
In December, RBI managed to find a buyer for three titles, selling Broadcasting & Cable, Multichannel News and Twice magazines to New Bay Media.
An exit strategy for Reed Elsevier has been in the works for a while, too.
Reed Elsevier – which last July stood at $8.4 billion — has tried for years to find a buyer for their publishing operation. The company put RBI on the block in February 2008, but dropped the sale at the end of that year “after bids were said to have fallen from approximately $2 billion to $1 billion.”
Added an individual at M&A: "They want to get out of the publishing business, and will part with Variety at the right price."