NEW YORK To reduce its exposure to the volatile advertising market, Reed Elsevier plans to sell its business-to-business magazine division, which includes media and entertainment industry titles such as Variety, Broadcasting and Cable, Multichannel News and Publishers Weekly.
The news came Thursday as Reed -- which in many areas competes with Adweek corporate parent the Nielsen Co. -- unveiled its 2007 earnings and a cost reduction program.
In a further asset shuffle, Anglo-Dutch Reed also said Thursday that it would acquire ChoicePoint, a provider of information services for the insurance industry, for $4.1 billion. This is seen as fitting in with its LexisNexis property and other data businesses.
The company said the planned sale of the Reed Business Information unit is focused on "reducing exposure to advertising markets and cyclicality" as the firm concentrates instead on subscription-based information and other offerings. It follows the recent sale of its education division.
"RBI is a well-managed high-quality business as evidenced by the success of its online growth and the control of costs," CEO Crispin Davis said. "Its advertising revenue model and the inherent cyclicality fit less well, however, with the subscription-based information and workflow solutions focus of Reed Elsevier's strategy."
In a conference call, he said sales talks haven't started yet, and no timetable has been set amid a still strained credit market. Private equity groups, but also strategic buyers are expected to take a look at RBI. Early analyst estimates said the division could fetch more than $2 billion.
"We value [the unit] at 1.3 billion euros, and private equity funding for this size deal is still available," said UBS analyst Polo Tang.