Within a week of each other, two major publishers of trade magazines and directories in the graphic arts and publishing markets reported major changes or restructuring. Yesterday, August 3, Cygnus Business Media announced it is restructuring under Chapter 11 protection. Just a week ago, July 30, Reed Elsevier announced that parts of Reed Business Information U.S. have been put up for sale.
In 2008 Reed Elsevier had put the unit up for sale, but withdrew the business from the market in December when offers dropped to $1 billion from around $2 billion.
While most of the RBI U.S. publications will be for sale, Reed Elsevier intends to keep Reed Construction Data U.S. & Canada, RS Means, Variety, Marketcast, LA411 and Buyerzone.
Cygnus on the other hand is restructuring under bankruptcy protection with the intent secure a debt-equity exchange to reduce its debt. The company expects to follow GM’s example and exit Chapter 11 in short order – within 45 days. GE Commercial will be the majority owner and the Cygnus’ secure debt will drop to $60 million from $180 million.
Earlier in July, Cygnus let 50 employees go from editorial, sales, sales support and graphic design functions, about 12% of its staff. At the same time at least four magazines were closed down: Modern Jeweler, Lustre, RV Trade Digest and Wood Digest.
In March, Cygnus cut 30 employees and consolidated the production and design teams. Three titles were suspended then: Photo Trade News (PTN), Studio Photography, and Imaginginfo.com.
Earlier, Cygnus eliminated its 401(k) contribution program and froze employee salaries.
Cygnus Business Media graphic arts and publishing titles:
- Printing News Magazine
- Quick Printing
- Quick Printing's The Source Annual Guide
- Wide-Format Imaging
Reed Business Information U.S. graphic arts and publishing titles:
- Publishers Weekly
- AF Lewis
- Converting Magazine
- Graphic Arts Blue Book
- Graphic Arts Monthly
- Packaging Digest
Discussion
By Harvey on Aug 04, 2009
It's no secret that these mags are circling the drain. Ad dollars are migrating to cheaper (not necessarily responsive) on-line media because the ads have failed to produce adequate responses. This was taking place long before the current economic state. It is also no surprise that direct mail as a whole is dropping by the wayside. I attribute this to the overused, under performing, dull and common place #10 envelope which seems to be the knee-jerk reaction to a DM assignment. It must go the way of the Dodo if digitally produced, information rich 1:1 direct marketing can fulfill its niche.
By PalatineMike on Aug 05, 2009
I mean no disrespect to GE Commercial, but lenders need to stick to lending money not running businesses they don't grasp. The US is littered with publishers, manufacturers, retailers and the like that have been dragged down by financial players who are not, at heart, passionate about the business they are now running.
Great companies were started by passionate visionaries, not LBO financial folks. Can you think of one great business started by MBA money guys? Financial service and Wall Street firms excluded.
Walton, Penney, Ward, Sears, Marshall Field, Macy, etc. loved retail and entrepreneured it into something better. The same goes for car companies.
By Michael J on Aug 06, 2009
The under appreciated benefit of bankruptcy is that it allows legacy business processes to reorganize as sustainable business processes.
My bet is that's how the GM + Chrysler thing is going to work out. If the trade mags are smart and lucky that's how it could work out for them.
When technology gets better, people lose their jobs. Usually as things settle down, the same technology creates more jobs.
Waves of "creative destruction" first coined by Joseph Schumpeter points to that reality of business.
Discussion
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