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WSJ.com: PE-Backed Media Companies Embrace The Digital Age



Wall Street Journal’s Private Equity Beat
PE-Backed Media Companies Embrace The Digital Age
By Beina Xu

Is Print Dead?

It’s the question every media company – and their investors – are asking themselves as the industry attempts to reshape business models to keep up with technology. A few companies, some owned and previously backed by private equity, discussed the topic of digitalization on a panel at investment bank DeSilva + Phillips’ Dealmakers Summit.

F+W Media Inc. is content creator and marketer of products for enthusiasts, and its chief executive, David Nussbaum, says the company has taken drastic steps to switch over to digital. (F+W completed an out-of-court restructuring in 2010 that diluted Abry Partners’ stake and wiped out minority backer Providence Equity Partners.)

In 2009 the business launched an e-commerce branch. In 2012, $40 million of its $160 million company budget will go toward digital transactions, Nussbaum said. The company transitioned out those on the staff who were too much “from print backgrounds,” and took a second look at its “terrestrial” products. “We publish a lot of books, so one time we brought an author into town to do a photo shoot. Then we realized there’s an opportunity here – we said, let’s shoot a video, and sell that video to our subscriber base. Suddenly, we expanded the life of that product.”

Advantage Business Media, backed by Catalyst Investors, is around 44% digital, with the balance being print, and a few events, according to its chief executive, Richard Reiff. Catalyst had bought the company in 2006. It, too, had switched out 70% of its old staff in favor of gravitating toward a digital focus.

Meanwhile, the Atlantic Media Co.’s digital presence shot to over 50% this year, and Justin Smith, its president, said it has been “radical” in decreasing its investment in print.

Print, however, is still alive for Advantage, a business-to-business platform for the life sciences sector with around $33 million in revenue. “We were very careful to support print,” Reiff said. “It’s a segment that’s beginning to feel like it’s stabilizing.” Deal volume in the media and marketing industry increased by 17% from 2010 to 2011, with a 47% increase in total transaction value, according to an M&A trend report done by investment bank Berkery Noyes & Co. Thomas H. Lee Partners had made one of the largest notable transactions, buying Acosta Inc. in a $2 billion deal early last year.

And while digital seems to be the way media companies will seek future growth, for F+W’s Nussbaum, the question of digital vs. print is not necessarily relevant one anymore. “I don’t think of it as print or digital; it’s content,” he said.

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