VNU pays a stunning $220 million for BPI - Verenigde Nederlandse Uitgeversbedrijven B.V.; BPI Communications L.P

In a surprise move, VNU, the Netherlands-headquartered media giant, on January 14 agreed to acquire New York City-based BPI Communications for a reported price of $220 million in cash. That works out to an estimated 14.7 times pretax 1993 cashflow--which was just under $15 million on total revenue last year of $132 million.

In today's market, that has the appearance of a return to the good old days of paying hefty multiples for media properties. It also secures the reputation of BPI's CEO, Gerald S. Hobbs, as one of the master dealmakers of the era. It began when he paid $36 million in 1985 for Billboard. Each buyout since then has reaped additional millions for the top executives. As in past deals, Hobbs says the present management is staying on.

Why such a high multiple of earnings? Munroe Pofcher, head of The Pofcher Company in New York City and an adviser to BPI on the deal, says that VNU is really paying more for the company based on what it is projected to do in 1994 with a reviving economy. "VNU believes the business looks substantially better for 1994," says Pofcher. Even with its Adweek subsidiary still in the red last year, the company posted a 40 percent gain in cashflow in 1993 versus the previous year, according to Hobbs. Pofcher says there were several inquiries from Europe, but no other serious bidders in the negotiated deal.

The publications involved--including trade magazines Billboard, Adweek (and its cluster of six regional editions, plus Brandweek and Mediaweek), Back Stage and Hollywood Reporter, and consumer titles such as American Artist and Musician Magazine--give VNU instant presence and weight in the United States. According to its 1992 annual report, the scope of the company's U.S. operation was limited to Business Information Services (marketing and financial data, including Rome Reports and Leading National Advertisers), which contributed 12 percent to the parent company's net revenue of $1.2 billion. The Dutch also acquired BPI's 80 percent stake in Adweek L.P.; Kenneth Fadner, an Adweek co-founder, retains his 20 percent share in the subsidiary. VNU already has a high profile across Europe with subsidiary publishing operations in Britain, Belgium, Italy, Spain and France. The company produces a host of mainstream titles that could easily be transplanted to the United States: women's/lifestyle/youth-oriented publications from its home base in Haarlem; computing weeklies from London; telecommunications books from Brussels; and science periodicals from Paris. Its buy of BPI goes a long way toward providing VNU with the publishing infrastructure--ad sales, printing, distribution, etc.--to support such a move in the United States.

A timely buy for BPI

The buy seems to be the answer to a New Year's wish for BPI, which was owned jointly by The New York Times Company, with a one-third interest; the venture capital firm Boston Ventures, which held a two-thirds share (see "NYT/Affiliated deal clouds BPI's future," FOLIO:, November 15, 1993, page 17); and BPI management. BPI's properties need investment, and at the moment, only the Dutch seem to be inclined to invest in redesigns and other changes. With so much focus and finance currently being directed toward interactive TV, the new information superhighway and multimedia applications, U.S. entrepreneurs and investors seem to be more interested in the electronic future than in the here-and-now world of print.

Boston Ventures, which has a policy of not talking to the press, declined to comment on the deal. A spokesman for The New York Times Company says that it expects to realize $55 million from the sale, but that the money would have no net impact on its results in the current fiscal year.

Hobbs says that the deal transpired when BPI approached VNU about buying its U.S.-based businesses. Officials at K-III and Capital Cities/ABC denied industry rumors that they had bid on the properties, although presumably K-III would have been more interested.

Says Hobbs, "I think it is a good deal for everybody. It raises the confidence of everyone in the American media." And he makes a bundle, once again.

COPYRIGHT 1994 Copyright by Media Central Inc., A PRIMEDIA Company. All rights reserved.
COPYRIGHT 2004 Gale Group