When you’re $8.4 billion in debt, you’ll try anything.
During its earnings call this morning (if you haven’t noticed, it’s pretty [1] much [2] earnings call week here in Media Alley), Reed Elsevier, the London and Amsterdam-based corporate owner of Reed Business Information, publisher of Variety, said that its U.S. business-to-business publishing unit is once again going on the block -- this time, though, without Variety.
Overall, the company’s profits plunged 48 percent during the first six months of the year.
Reed has long sought a buyer for RBI, but without much success. Today, the company said it would be open to selling off a significant chunk of RBI, specifically, magazines with controlled circulation.
Last year Reed announced plans to divest its magazine group, that includes Variety, to pay down its heavy debt, but -- after it couldn’t find a buyer for the entire group and watched bids come in well below its asking price of $2 billion -- squashed those plans in December.
“The terminated sale of RBI (has) given us more debt than is prudent in current economic conditions," chief executive Ian Smith admitted today.
What today’s announcement really means, though, is that Reed wants to keep its most valuable and/or relatively desirable properties -- Variety, Reed Construction Data, etc. -- and unload the rest. It’s called cherry-picking, Dutch-style.
But now there's one vital question: Who would want to buy the publication group if the money-making titles aren't part of the sale?
That was certainly the buzz around RBI last year when the first sale didn't go through.
Additionally, the company said that Tad Smith, chief executive of RBI’s U.S. division, has resigned from his post. (John Poulin, RBI’s CFO, was appointed acting CEO, replacing Smith.)
"The depth and length of the downturn is, however, having some effect on even our most resilient businesses,” Smith added. (He wasn’t talking about its magazines.)
Shares in the company plummeted as much as 14 percent on the London Stock Exchange after Reed revealed its first half financials and lowered its second half outlook.