Advanstar/Miller Freeman Sales Could Be Industry Bellwether - Brief Article - Statistical Data Included

A great deal for the b-to-b industry may ride on what shakes out. Time will tell.

* The potential sales of b-to-b heavyweights Advanstar and Miller Freeman are shaping up as industry bellwethers, say sources. Indeed, the eventual deals could answer two key questions that have been circulating in the marketplace: What's the appetite on the street for major b-to-b players, and how much are prospective buyers willing to pony up?

Yet others say comparing the two companies' sales prospects is like apples and oranges, and that they don't portend any significant trend for the industry.

Advanstar announced in early May that it would be putting out exploratory feelers for potential buyers. In December, United Kingdom-based United News said it was selling Miller Freeman's non-core and non-Internet related properties.

"The world has been strangely silent since Miller Freeman announced it would be auctioned," says Bob Crossland, managing director of New York-based M&A firm AdMedia Partners Inc. "Either the serious players are playing it close to the vest, or there aren't any serious players out there."

Sources say financial buyers are likely to top the list of prospective buyers, along with b-to-b giants Primedia, Reed Elsevier's Cahners Business Information unit, VNU and Penton Media. They also say there are a couple big "ifs" surrounding any potential deals. "If the multiples are low, it will affect the smaller deals. But if it's a high multiple, people will figure it's wise to take a closer look at the b-to-b market," says Crossland. "And the multiple can tell other potential buyers what they could expect if they were to decide to cash out in the current economy."

Putting aside computer magazine giants Ziff-Davis and CMP, the mergers and/or acquisitions could end up being the biggest financial transactions involving mainstream b-to-b magazine publishers since Reed Elsevier bought Chilton Business Group from Walt Disney Company in 1997 for $447 million.

Another big if--price. "If the rumored numbers are to be believed, the prices reflect a bullishness in the b-to-b publishing field," says Cam Bishop, president/CEO of Intertec Publishing, publisher of FOLIO:.

Advanstar, which has 73 magazines and runs 116 trade shows and expositions, had revenues of $328.8 million in 1999, a 75 percent increase from 1997. In comparison, Miller Freeman has more than 1,000 media products encompassing b-to-b magazines, commercial Web sites and online services and trade shows and conferences. In 1999, the San Francisco-based company chalked up $785 million in revenue, up more than 73 percent from 1997.

Crossland says the timing of Advanstar's May announcement could ultimately prove advantageous to the Cleveland-based company: "If there are a limited number of serious buyers for b-to-b, and Advanstar believes it has a superior package of attributes for a buyer, then they're right to go to market the same time as Miller."

But Miller Freeman president/CEO Don Pazour says he does not think the timing of Advanstar's decision will affect Miller Freeman's opportunities. "The bottom line is that these are two very different portfolios," he says. "They're both pretty substantial, so I can't really see someone buying both. Of course, there may be buyers looking at both, but I think the two companies have very different meanings for buyers."

Bishop amplified Pazour's comments: "Miller Freeman has to do with portfolio management, whereas Advanstar is looking for an exit strategy. They're totally unrelated." Advanstar CEO Bob Krakoff even went so far as to say that the company's announcement that it would retain Morgan Stanley Dean Witter and Peter J. Solomon Company to examine strategic alternatives--including the potential sale of Hellman & Friedman's equity interest in Advanstar--doesn't necessarily mean Advanstar is completely in play. "This is an exploration of strategic alternatives. That means something could come of it, or not," he says. "Over time, we've had several people contact us, interested in Advanstar, so we decided that, rather than doing it one by one, let's just open the field and see what comes of it."

Advanstar has taken pains to fatten up its portfolio in the last few years, acquiring 27 properties since 1996 and launching 20 magazines and trade shows in 1999 alone.

Miller Freeman, for its part, doubled in size last year when its United Kingdom-based parent United News Media acquired CMP Media last year for $920 million. The sale boosted Miller Freeman into the third biggest technology publisher spot, behind International Data Group and Ziff-Davis Inc.

Bishop says that due to the sheer size of both Miller Freeman and Advanstar, liquidation is an unlikely scenario for both companies. "A lot of players like to come in and slice and dice," he says, "but these companies have such large and multiple platforms that I seriously doubt that's an option."

Adds John Wickersham, president/CEO of VNU Business Media, which owns Bill Communications, "Each company has quite different a profile. It's just unfortunate for the sellers that they are on the market at the same time. It could dilute the prices."

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