Two things you should know from Anglo-Dutch publisher Reed Elsevier’s bombshell announcement is this: Tad Smith wasn’t fired. He actually resigned in July because he has another job starting September 1st. It was merely announced Thursday because so much other news was being announced, too. Like disastrous earnings, and a distress sale of its U.S. media. Tad stays through August 31st and then heads to a big consumer media organization. They’re lucky to get him. (He once tried to buy the New York Observer from Arthur Carter. He likes print that much.)
And the other is that folks at Broadcasting & Cable, MultiChannel News, and many other of the 80 or so trades controlled by Reed Business Information-US now on the auction block (except Variety) never saw it coming. In fact, so certain of survival were they that I received this email late Tuesday night from an insider: “Thursday is the Reed Elsevier parent company earnings report… Reports out of England say Reed won’t sell the US businesses (RBI) after all…” I also heard from a source that B&C thought Reed considered it “a sign of hope” for moving so much of its revenue off of print to event and digital businesses. While competitors like TV Week vanished into the night. (Have you seen their website lately? It’s like a bad tabloid wannabe. One day, 5 headlines consisted of different sex stories.)
So, to sum up, Reed Elsevier CEO Ian Smith who took over in March, and Keith Jones, whose duties were expanded to include RBI globally in December, and Anthony Habgood, the non-executive chairman of Reed Elsevier as of May, all bear responsibility for this newest bloodletting. It followed an overall “strategic review” after Reed tried and failed to get a decent price for RBI-US last year to reduce its massive debt load. And Tad Smith had been working with the bosses for months to help figure out what stays and what goes. So John Poulin takes over Tad’s job, and the shakeup at the top of the company is complete. Now it’s the people at the bottom who’ll suffer while wondering if they have jobs in the future.
Here is Tad Smith’s internal email:
From: Corporate Communications (RBI-US)
To: RBI-US All Employees
Sent: Thu Jul 30 13:03:27 2009
Subject: Message from Tad Smith
My note today is not so much a resignation as it is a “thank you.” Joining our company a little over nine years ago as the executive responsible for what was then Cahners’ Internet operation, I never expected to have this much fun with so many great people for so long. Thank you all for the wonderful run!
All of us at Reed Business Information should be very proud of our results, and I begin with a congratulations to all of you. Nine years ago, we had almost no electronic revenue in our company; this year, 34% of our revenue will be electronic. Our phenomenal brands including such industry icons as Interior Design, EDN, Building Design & Construction, Broadcasting & Cable, Publishers Weekly, Library Journal, Restaurants & Institutions, TWICE, Multichannel News and dozens of others have weathered two economic downturns, terrorism, a divestiture process last year, and the migration of print advertising to a digital medium. Throughout that period, these franchises have strengthened competitively as they have built their online futures from scratch.
Nine years ago Marketcast was a tiny little research business losing money against a competitor that was more than ten times larger. Having grown at double digits throughout this challenging decade, today Marketcast is number one in its market and has recently expanded to London. Reed Construction Data, after a wobble in its performance in the middle of this decade, retooled itself under new leadership to become a strong growth business with a bright future in the construction market. BuyerZone, acquired over two years ago, has carved out a strong position in the online lead generation business with a future poised for strong growth across more than a hundred B2B categories.
Finally, let me say there is a very special place in my heart for Variety. Not only is it our largest single brand, it has tended to attract plenty of attention over the years. Despite the economic downturn, pressure on studios’ DVD profits, independent film financing crunch, creatively weak Oscar Season, and nearly every other Hollywood scourge short of locusts over the past year, Variety is solidly profitable and provides a growth platform at Reed Elsevier for many years to come.
For all of these and many other reasons, congratulations to all of you at Reed Business Information for building such great brands and wonderful businesses over the years. Thank you for having me along for the great ride!
In closing, I will miss the people at our great company most of all. Thank you for your dedication, professionalism, integrity, occasional forbearance, and especially your ability to make me laugh out loud on those days when I really needed to!
August 31st will be my last day, and I wish each of you every success in the future.
And Keith Jones’ email:
From: Corporate Communications (RBI-US)
To: RBI-US All Employees
Sent: Thu Jul 30 02:15:14 2009
Subject: Important Message from Global RBI CEO Keith Jones
Since taking over as CEO of RBI in December last year, I have had the opportunity to review all of our businesses and meet with colleagues working in many of the countries we operate in. Despite the serious trading pressures we face, I am very excited by what I have found.
I believe we have all the ingredients to build a world-class B2B media company, with online products and services providing an increasingly important revenue stream, where we engage more closely with our customers, meeting the evolving needs of users and advertisers with some of the very best brands in B2B media; and all of this underpinned by the most creative and dedicated people in the industry.
Equally we have to contend with a far harsher advertising environment than any of us have experienced before and, in such a climate, we have to focus not just on innovation and efficiency, but also on ensuring that our portfolio is well-matched with our long-term ambitions.
Having completed our portfolio review, we have decided to focus our efforts and investments on a narrower range of brands and markets, and with this in mind we are announcing today our intention to divest a significant part of the RBI US business.
While we will be retaining Reed Construction Data US & Canada, RS Means, Variety, Marketcast, LA411 and Buyerzone within RBI – these are businesses that fit well with our plans and they are leading brands in their markets – we are announcing today our intention to sell all the other publications and services in RBI US, as well as their related titles and services in Asia.
This has been a difficult decision to reach as there are many strong brands here, with very experienced and professional teams running them, but we have concluded that they are less well suited to RBI’s strategy going forward. I would like to thank the teams for their commitment to the brands and markets they continue to serve. We are also announcing today that Tad Smith has resigned as CEO of our US business. Tad is leaving to pursue a new job challenge. On a personal note I would like to thank Tad for nine years of outstanding service, latterly as CEO of RBI US. We wish him well, and he leaves with our best wishes.
John Poulin is appointed with immediate effect as acting CEO for RBI US – for the portfolio we are to divest and for all support services within RBI US. In this role he will report to me, and he will continue in his role as CFO with a functional report to Trevor Jenkins, RBI’s Global CFO. In addition to his current duties, Jeff DeBalko, President of Business Media and Chief Internet Officer, will take responsibility for our Chicago-based construction titles under Dean Horowitz, New York-based Interior Design under Mark Strauss, along with Tradeshow Week and Video Business.
Reporting lines for the businesses we are retaining in the US will change as follows, with immediate effect: Iain Melville at RCD and Neil Stiles at Variety will directly report to me (with Henry Shapiro at Marketcast continuing to report to Neil). Mie-Yun Lee, President of Buyerzone, will report to RBI UK Managing Director Dominic Feltham, who will be responsible for developing our lead generation businesses across RBI.
These are challenging times for all media businesses. The changes we have announced today will position RBI well for the future. Although our portfolio will need to continue to evolve in the years ahead, the major changes to RBI’s portfolio are now complete. I look forward to working with colleagues across RBI to build a strong, growing business for the long-term.
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