INTERNATIONAL: MEDIA GIANTS (SPONSORED BY MOTHER TONGUE WRITERS) - Reed Elsevier does away with the old and looks towards the bright, new online future/The sale of IPC and the merger with Wolters show Reed Elsevier has vision, Alasdair Reid writes

Reed Elsevier isn’t often associated with media’s leading edge.

Reed Elsevier isn’t often associated with media’s leading edge.

In fact, despite owning the UK’s biggest consumer magazine company, IPC,

the word that most often springs to mind is ’dull’. This is the company

that in the past 30 years has flirted with, and then run a mile from,

national newspapers (the Mirror titles), satellite television (BSkyB)

and consumer book publishing (Methuen, Heinemann, Mandarin, Minerva,

Secker and Warburg etc). Reed has often appeared to have the desire to

be a big media owner without the nerve or the flair to stand in the

spotlight - preferring the relative anonymity and predictability of

business publishing.

But we may have to reassess that judgment in the light of recent


The word being whispered these days is ’vision’. And Reed has had more

than its fair share of the limelight this year. First a scandal with

overcooked circulation figures at its travel guide division in the US,

then the announcement of a merger with Wolters Kluwer and, to cap it

all, the news that IPC is up for sale.

And perhaps a pattern is emerging - the history of Reed may now be seen

as the story of the rise and fall of media’s infatuation with paper.

Coming in on the coattails of a boom in popular newspaper publishing a

century ago, it started life as a newsprint manufacturer and spent its

first 50 years diversifying into related commodities - ink, paint,

packaging and even wallpaper. But by the 60s it had realised that

content rather than commodity was the more important side of the

business and it began a rapid transformation into a major media


The rollercoaster years lasted from 1970, when Reed International, as it

then was, bought the International Publishing Corporation (including the

Mirror titles as well as consumer magazines), until 1993, when it merged

with Elsevier, one the world’s leading business and professional


The Elsevier deal put an end to the dabbling in consumer media. The

Mirror titles were long gone, sold to Robert Maxwell in 1984, but now

its stake in BSkyB, its consumer book empire and its regional newspaper

chain were obviously destined to come under the hammer.

Reed had already built up a substantial business-to-business magazine

portfolio, including Cahners in the US, and this dovetailed perfectly

with Elsevier’s strengths. The merged company had a clear focus on

providing essential information for business and the professions - trade

journals, guides, databases and textbooks. Professional information is,

the company would argue, the ’purest’ medium there is.

This love of pure information made the group less reliant on

conventional presentation formats, such as paper and ink. Was it time

for a radical rethink? The answer came in 1994, when it shelled out

dollars 1.5 billion to acquire the US outfit, Lexis-Nexis, the world’s

largest online information provider, specialising in legal data. And it

used the Lexis skills base to develop ScienceDirect, an online system

for accessing the information in all of the Reed Elsevier scientific

titles. It also signed an agreement to supply scientific, professional

and business information to Microsoft’s Internet systems.

The merger with Wolters Kluwer makes the new company the largest

professional and scientific publisher in the world. The jewel in the

Wolters Kluwer crown is CCH, a specialist publisher of tax and

commercial law material in the US, Canada and Australia. It also has

legal, medical, scientific and business publishing interests across


The new company, whose chief executive will be Cornelis Brakkel, the

Wolters Kluwer chairman, will be operational from next year - assuming

it gets clearance from European and US competition authorities. It will

be worth pounds 19.5 billion and, on last year’s figures, it will have

combined annual revenues of pounds 5 billion and profits of pounds 1.2


Around 20 per cent of existing Reed Elsevier revenue is derived from

online subscriptions and its strategy is to drive that figure rapidly

upwards. That will come partly from organic growth, but more importantly

from acquisitions - and there will be no shortage of funds. This year

alone, Reed Elsevier has spent pounds 600 million on acquisitions, not

counting the merger, which in any case will largely involve a swap of


Next year, fuelled by the proceeds of the IPC sale, it will have an even

larger war chest, which is likely to go on deeper penetration of the

online financial information world. Giants such as Reuters or Bloomberg

could be possible candidates.

One thing that will not be a priority in the future is advertising

revenue, which Reed has long considered too unpredictable for


In short, the IPC sale signals not just a further retreat from paper,

but from the world of double-page spreads and recruitment tombstones


The move will take Reed Elsevier out of the consumer market altogether,

but advertising agencies still can’t ignore it. After all, it’s out

there with the Microsofts of this world, roadtesting the online media of

the future.



Reed Elsevier made pre-tax profits of pounds 805 million, up 9.5 per

cent year on year, on total revenues of pounds 3.38 billion in 1996. In

October it agreed a merger with the Amsterdam-based business publisher,

Wolters Kluwer, to create a company with equity worth pounds 19.5



IPC The UK’s largest consumer magazine publisher with 70 titles

including Woman’s Own, Marie Claire, Loaded and Country Life. Turnover

in 1996 was pounds 314 million. Now up for sale with asking price of

between pounds 750 million and pounds 1 billion

Reed Business Publishing UK business-to-business titles including

Estates Gazette

Misset Leading business-to-business publisher in the Netherlands

Reed Travel Group Subscription-based travel information, including OAG

World Airways Guide and Hotel and Travel Index

Reed Consumer Books Has sold most of its better-known imprints but is

still trying to offload its illustrated, children’s and reference


Butterworths Legal and tax publishing

Reed Educational and Professional

Publishing Elsevier Science Scientific journals

Reed Elsevier Business Information Includes US business-to-business

publisher, Cahners (which publishes Variety), and Chilton Business

Group, including 39 US trade magazines, acquired from Disney in June for

dollars 447 million

Lexis-Nexis World’s largest online data provider

MDL Information Systems US scientific information management systems.


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