Mike the Mad Biologist

Reed Elsevier Publishing in Trouble

This couldn’t have happened to a nicer bunch of assholes:

The collapse of the sale of publisher Reed Elsevier’s business information unit was inevitable. It’s what happens next that’s crucial.

Reed was planning to use the sale proceeds to pay down debt from its $4.1 billion acquisition of U.S. personal data firm Choicepoint earlier this year. If it doesn’t find another solution, it risks losing its A- credit rating.

So now it faces a choice. Most likely, it will launch a $2 billion bond issue in January ahead of the first tranche of Choicepoint debt falling due in March – a move likely to raise Reed’s overall cost of financing by 9%, according to analysts.

The alternative is to roll over the existing debt for another year in the hope of getting the sale of RBI away next year. But if it fails, it faces having its credit rating downgraded which would push up the cost of financing still further. Fitch has already revised Reed’s outlook to negative from stable because its net debt will total three times Ebitda at the year end. That compares to around one times for sector peers Pearson and United Business Media.

On the plus side, Reed is a broadly defensive stock within the media industry. RBI, the unit that was up for sale and that’s been worst hit by the economic downturn and advertising slowdown, accounts for less than 10% of operating profit. Reed’s scientific and legal publishing business and exhibitions and events continue to deliver a solid performance.

But Reed’s insistence on selling RBI as a whole, rather than piecemeal, now looks foolish. While breaking up the business could have been a protracted process, there was more interest in individual country units such as the U.K., U.S. or Dutch ones than in the division as a whole.

Expect journal prices to increase….

Comments

  1. #1 Dan
    December 12, 2008

    I think my favourite comment on Elsevier comes from Luc Devroye’s page:

    http://cg.scs.carleton.ca/~luc/rnbookindex.html

    the electronic version of a book I’ve enjoyed.

    Quote:

    So, there you have it. Eventually, I will do this with all my books. While I love Springer, my honeymoon with them is over. I will of course never start any affairs with the champion bloodsuckers like Elsevier, Kluwer or Dekker. Outfits I like are SIAM (nonprofit), Dover (great pricing) and Oxford University Press (allowing authors to post books on the web). With the arrival of Amazon, book advertising is no longer necessary, and one can publish with any company, really. So, it will be a matter of a few years before the old publishers will come back to the academics on their hands and knees asking for manuscripts. Too late.

  2. #2 oyun
    December 13, 2008

    ? have followed your writing for a long time.really you have given very successful information.
    In spite of my english trouale,I am trying to read and understand your writing.
    And ? am following frequently.I hope that you will be with us together with much more scharings.
    I hope that your success will go on.

  3. #3 freddie
    February 18, 2009

    Heard today from a co-worker (former Elsevier employee) that: the NY Elsevier journal production office will be gutted, resulting in a total of 10 employees to supervise the off-shore production operation as of Jan 2010. Haven’t been able to confirm this independantly, but your post on their failure to sell the business unit in December sheds a bit more light on things. Not being that familiar with this department, I’m not sure how “gutted” is being defined: are they cutting staff by 50%, 90%, or what?

  4. #4 mirc
    March 8, 2009

    thanks

  5. #5 pru
    March 23, 2009

    there have been a large number of redundancies from the production department at the Amsterdam offices of Elsevier and similarly, although fewer in number, at the Edinburgh office

    much of the work is being relocated to the Elsevier offices in Chennai, India

    I have a problem in that as a freelance editor/proofreader none of my invoices this year have yet been paid with no explanation as to why – also as an Elsevier pensioner my pension income this year has been frozen

    it has been impossible to get any information on what is happening

  6. #6 MidwesternFreelancer
    July 13, 2009

    Very informative blog post, and interesting comments.

    Sumitted a freelance job to Elsevier (incredibly detailed lesson plans for one of the ‘Bible’ textbooks in a particular field), with an invoice of <$1000.

    Work was submitted to satisfaction in Q4 (Sept/Oct 2008)- we (~20+ contributors) have still yet to be paid, and it’s Q3 2009.

    No- not big money, but even less to Elsevier, no?

    We have some ideas for ‘next steps’, but any thoughts/ideas are appreciated!