Reed Elsevier Plc.
Reed Elsevier Plc.
Joint Venture of Elsevier N. V. and Reed International plc
Incorporated: 1880 as Uitgeversmaatschappij Elsevier; 1903 as Albert E. Reed & Company Ltd. Employees: 26,100
Sales: £3.16 billion ($5.29 billion) (1998) NAIC: 51112 Periodical Publishers; 51111 Newspaper
Publishers; 5114 Database and Directory Publishers; 51113 Book Publishers; 511199 All Other Publishers
Reed Elsevier plc is the joint venture of London-based Reed International plc and Netherlands-based Elsevier N.V. The company is a leading publisher and information provider with principal operations in Europe and North America. Reed Elsevier focuses on scientific, professional, and business publishing and publishes about 1,200 scientific and trade journals and magazines, including a medical journal, The Lancet. The company’s business division produces magazines, including Variety and Publishers Weekly, through subsidiary Cahners Business Information. Reed Elsevier also owns information service provider LEXIS-NEXIS. In the late 1990s, Reed Elsevier was focusing on expanding its electronic publishing operations to remain competitive in the rapidly changing publishing industry.
The History of Elsevier N.V
Elsevier was founded as Uitgeversmaatschappij Elsevier in Rotterdam in 1880 by a group of five Dutch booksellers and publishers, led by Jacobus George Robbers. They took the company name and imprint from the publishing house of the Elsevier family, which had flourished between the late 16th and early 18th centuries. After the company moved its headquarters to Amsterdam in 1887, its early success depended on publishing a literary journal, Dutch versions of the then-popular novels of Jules Verne, and the WinklerPrins encyclopedia, which became the Dutch equivalent of the Britannica.
Elsevier first ventured into scientific publishing in the late 1930s, and then, after World War II, diversified its range, publishing trade journals and consumer magazines but chiefly building up its reputation as publisher of a number of scientific journals in English, starting in 1947 with Biochimica et Biophysica Acta (BBA). Elsevier Science Publishers then expanded further by acquiring other companies in the same field, such as the North Holland Publishing Company—founded in 1931, acquired in 1970—and Excerpta Medica, acquired in 1971.
For Elsevier “scientific” had the wider meaning common on the continent of Europe of “academic,” rather than the narrower Anglo-American definition. Thus, while the company was the world’s leading publisher in the life sciences, and issued journals covering the whole range of the natural sciences, it also published journals on history, law, economics, and statistics, as well as engineering and technology. A measure of the company’s prestige was that by 1990 its publications had included work by the winners of 62 Nobel prizes, of which 29 were for physiology or medicine. More crucially, perhaps, its leading journals maintained this prestige by a rigorous process of peer review. In the case of Brain Research, for example, this meant that half of the articles submitted were rejected, and only four percent were published unaltered.
Elsevier merged with the newspaper group Nederlandse Dagbladunie N.V. early in 1979. This merger brought ownership of the national newspapers NRC Handelsblad and Alge-meen Dagblad, which by the late 1980s had a combined circulation of nearly 650,000; three regional newspapers; and several local newspapers, including free advertisement-based papers. The enlarged group was reorganized under the newly founded holding company Elsevier N.V.
Elsevier’s strategy beginning in 1980 was to concentrate on the English-language market, both by developing its existing output further and by acquiring new American subsidiaries, which had been organized into two groups. Elsevier Information Systems Inc. comprised three subsidiaries. The Congressional Information Service (CIS), based in Bethesda, Maryland, was Elsevier’s first American acquisition, in 1979. CIS issued information from American and international government sources and archive material on scholarly subjects, on microfiche and microfilm. The Greenwood Publishing Group, based in Westport, Connecticut, specialized in reference works and books on the humanities, business, and law, and included the Praeger, Bergin & Garvey, and Auburn House imprints. Else-vier Realty Information, Inc. (ERI), of Bethesda, Maryland, was an amalgamation of Redi and Damar, two companies acquired in 1988. It distributed information on property to professional customers and published real estate maps of most major cities in the United States.
Elsevier Business Press group consisted of four subsidiaries. The Springhouse Corporation of Springhouse, Pennsylvania, acquired in 1988, published a range of journals, books, and videotapes for healthcare and education professionals and small and medium-sized businesses. Delta Communications of Chicago specialized in magazines for various industries, such as Modern Metals and Packaging Digest. Gordon Publications of Morris Plains, New Jersey, acquired in 1985, issued nearly 20 product news publications. Finally, the Excerpta Medica International group, based in Princeton, New Jersey, as successor to the Excerpta Medica company acquired in 1971, published the highly successful Excerpta Medica Database (EMbase), which was an annual compilation of abstracts of more than 300,000 items of medical literature, as well as other publications on medicine.
In 1985 Elsevier expanded into the flourishing business of educational courses and materials, in the Netherlands and in Belgium, through its subsidiary Elsevier Opleidingen (Elsevier Training Institutes). Its other European operations comprised the Pan European Publishing Company (Pepeo) of Brussels, which issued product news tabloids in English; Misset Publishers, based in Doetinchem, which led the Dutch market for trade journals; Bonaventura of Amsterdam, which published the weekly news magazine Elsevier and many other periodicals; and Argus of Amsterdam, publisher of the Grote Winkler Prins encyclopedia and other Dutch-language reference books.
Not all of Elsevier’s attempts at expansion were successful. The group began a long campaign to take over Kluwer, which was then the third-largest publisher in the Netherlands, in 1987. Kluwer, which had a similar range to Elsevier’s, but preferred to develop its Dutch market, resisted the attempt, even when Elsevier lowered its sights to trying for 49 percent of its rival’s shares. In order to finance this operation Elsevier itself had to issue new shares, which were bought mainly by the British media magnate Robert Maxwell, who ended up with a holding of nine percent in Elsevier. The next step was a merger between Kluwer and its main shareholder, Wolters Samsom, to form Wolters Kluwer, which temporarily took Elsevier’s place as the second-largest Dutch publisher. Eventually Elsevier ended up with 28 percent of Wolters Kluwer. It sold these shares in 1990, yet announced that it had not abandoned the idea of an eventual merger with Wolters Kluwer.
In 1988 Elsevier formed a publishing alliance with Pearson plc, a publishing conglomerate based in London, which owned the Financial Times, Viking Penguin, Longman, and several other media companies. Also in 1988 Elsevier successfully resisted a takeover bid by Maxwell Communication Corporation, the holding company owned and operated by Robert Maxwell. By 1991 Pearson owned 22.5 percent of Elsevier shares, while Elsevier held 8.8 percent of Pearson’s equity. In April 1990 the two groups announced that they would not proceed with any further moves toward merging because of the legal and fiscal problems such moves would bring. In March 1991 Pearson sold all of its Elsevier shares to the merchant bank Goldman, Sachs, which was to sell them on to other investment institutions. One month later Elsevier decided to sell its holdings in Pearson in its turn.
Dagbladunie, Elsevier’s newspaper subsidiary, was to have merged with a rival group, Perscombinatie, until negotiations were abandoned in 1989. The same year saw strikes by printers and journalists at the Algemeen Dagblad, which led to a slight fall in the paper’s circulation. In 1990, however, both of the national newspapers in the subsidiary significantly increased their circulation, taking readers away from their rivals, while the three regional newspapers improved their advertising revenue. The decision to invest in extra color printing capacity, to come into operation by 1995, represented a vote of confidence in the future of all five titles.
Like other companies which have been successful in one sector of the media, Elsevier started to cross into other sectors. The group owned 50 percent of the film financing partnership Elsevier Vendex Film CV—perhaps best known for producing Peter Greenaway’s recent films—and in 1990 it bought 19 percent of RTLVéeronique, a company based in Luxembourg, which produced television programs for satellite broadcast.
Between 1984 and 1990 Elsevier’s net income quadrupled as its directors carried out a policy of shifting resources away from less international, less specialized, and less profitable areas, such as consumer magazines, toward the heights of international, specialized, and very profitable scientific publishing, for which the market tended not to be much affected by the ups and downs of the wider economy. In 1989 alone, for example, Elsevier Science Publishers added another 30 titles to its list of periodicals, most of them acquired rather than newly launched. As a result of these and other ventures Elsevier’s net profits reached Dfl 500 million in 1990.
Our priority will be to develop our products in tune with our customers’ needs, and our success will be based upon quality products and information services at appropriate prices. In each of these businesses, we must strike the right balance between building our services in electronic media and optimising the performance of our traditional print activities.
In 1991 Elsevier added to its list of subsidiaries the biggest single acquisition it had ever made, the Bntish scientific publisher Pergamon Press, which it intended to maintain separately from Elsevier Science Publishers. Elsevier paid £440 million for Pergamon, most of which went to its founder, Robert Maxwell, the man who had tried to buy Elsevier itself only three years before. Maxwell had created Pergamon Press in 1951 on the basis of his connections with the German scientific publisher Springer Verlag and then built it up into a major rival to Elsevier Science Publishers.
The Elsevier group, immensely profitable as it was in the early 1990s, was not without problems. The record of failure of its attempts to merge with or take over its large rivals, other than Pergamon, somewhat offset the success even of its largest acquisition. Whatever less specialized publications it chose to retain were subject to suffer from economic recession and competition from rival media groups seeking to build up strength for the European single market. Those areas of Elsevier’s Dutch-language activities which depended on advertising revenue—especially newspapers and general-interest magazines—might also have been adversely affected by competition from commercial television, which reached the Netherlands at the end of 1989.
The History of Reed International
The beginnings of Reed International date to 1894, when Albert Reed bought Upper Tovil paper mill at Maidstone, Kent. He was then 48 and already successful in paper manufacturing. After going into the paper business as a boy he had become a manager, and then part owner, of a number of paper mills in different parts of the country, but Upper Tovil was the first that was entirely his. It had been badly damaged in a fire when he bought it, so he was able to install new machinery before reopening it.
Over the years Reed had experimented with different materials and machinery to produce types of paper suitable for the halftone blocks that were then being introduced. At his new mill he specialized in these papers and soon built up a good trade with the publishers of illustrated magazines. Within two years he had more than 100 employees and had installed a new machine. When Upper Tovil had been expanded to its limit, Reed bought other mills, owning seven by 1903. In that year the business was incorporated as Albert E. Reed & Company Ltd., to enable more capital to be raised.
One of the firm’s best customers in its early days was the publishing business of Harms worth Brothers. This connection chiefly fueled Reed’s growth from 1904 onward. Alfred and Harold Harmsworth, shortly to become Lord Northcliffe and Lord Rothermere, respectively, had built up the most dynamic publishing business in London. Only 15 years after launching their first magazine, Answers, they controlled a string of magazines and newspapers, including the successful Daily Mail. They had one failure, however, a new paper aimed at women, called the Daily Mirror. To save it they decided to relaunch it in 1904 for a general readership as an all-picture paper, using a new grade of fine newsprint introduced by Reed. In this form the Daily Mirror became a success, and the Reed paper business grew with it. By the outbreak of World War I in 1914, the Daily Mirror was the largest-selling daily newspaper in the world, and Reed was supplying the newsprint not only for that but also for several national newspapers. The company took over more paper mills in the United Kingdom and invested in pulp mills in Norway and in Newfoundland, Canada.
World War I put a temporary stop to Reed’s growth. Supplies of pulp from Scandinavia were cut off, newspapers became smaller, and Reed was forced to close some of its mills. At the same time the Newfoundland venture proved uneconomical. Reed sold it to his friends, the Harmsworths, who were developing their own pulp mill nearby. Soon after World War I another financial crisis was precipitated by Albert Reed’s death in 1920. His twin sons, Ralph and Percy, were determined to carry on the business, but a large sum had to be found to pay the duty on their father’s estate and, in any case, some members of the family wanted to turn their shares into cash. Once again, the Reeds turned to their largest customer. Lord Northcliffe had died, but Lord Rothermere agreed to buy a large block of shares in Reed, through the Daily Mirror and Sunday Pictorial companies, which he now controlled. The Reed brothers still had voting control, but Rothermere’s holding of around 40 percent of the equity rendered him a major influence in its affairs. He seems to have made little use of this influence, having had many other business commitments, but half a century later this shareholding was to change the nature of Reed’s business.
The Reed brothers began to implement the plan for the company that their father had conceived during the war. This was to sell their remaining overseas operations and most of their U.K. mills and concentrate their resources on a single, modern plant, using the largest machines available. In this way they hoped to undercut all competition. A site was selected at Aylesford, a few miles downriver from Tovil, and the new mill began production in 1922.
- Five Dutch booksellers form Uitgeversmaat-schappij Elsevier, a publishing company.
- Reed International, a paper manufacturer, forms in the United Kingdom.
- Reed incorporates as Albert E. Reed & Company Ltd.
- The Daily Mirror and Sunday Pictorial companies become the International Publishing Corporation.
- International Publishing Corporation and Reed merge to become Reed International.
- Elsevier merges with Nederlandse Dagbladunie N.V., a newspaper group, and forms Elsevier N.V.
- Elsevier acquires Congressional Information Service.
- Reed acquires Octopus Publishing, its largest publishing acquisition to date.
- Elsevier purchases Pergamon Press in its largest acquisition to date.
- Reed Elsevier joint venture forms.
- Company acquires LEXIS-NEXIS, a premier information services provider.
- Reed Elsevier acquires Matthew Bender & Company, Inc., a legal information provider.
The new strategy worked well. Despite the Depression the Aylesford plant was steadily expanded and, by 1939, was the largest of its kind of Europe. Newsprint remained the company’s chief product, but from 1929 onward Reed also made kraft paper from which it produced corrugated board and paper sacks. With these new products the company captured a large share of the packaging market.
During World War II production had to be drastically reduced because of lack of pulp and did not regain prewar levels until 1950. The next few years were a boom period for Reed. The company added to its newsprint and kraft manufacturing capacity, expanded into new forms of packaging, entered the paper tissue market in a joint venture with Kimberly-Clark, and invested some of its profits in pulp mills overseas. Within seven years Reed’s work force doubled to 14,000.
In the late 1950s, however, conditions changed for the worse. First the government put an end to the price-fixing arrangements that Reed had with other paper manufacturers, and then to the tariffs that had shielded the U.K. paper industry from Scandinavian competition. This latter change was the result of U.K. membership in the European Free Trade Area and was to be introduced over several years, but its implications were clear from 1959. Without the tariffs, newsprint and kraft made from imported pulp would be unable to compete with Scandinavian products. Reed would have to make major changes.
It was unfortunate that the company had to face this crisis with a relatively untried management. Sir Ralph Reed had retired in 1954, ending the era of family control, and his most able colleague, Clifford Sheldon, had died a few years earlier. Both the new chairman and managing director came from outside the paper industry. They took prompt steps to reduce the company’s dependence on imported pulp but could not prevent a slide in profits. In 1960 the company’s largest shareholder decided to intervene.
This was no longer Lord Rothermere, who had sold his shares in the Daily Mirror in the 1930s, but a new group that had been created from the nucleus of the Mirror. The latter paper and the Sunday Pictorial had declined in the 1920s under Rothermere’s ownership but had recovered under his successors. In the late 1930s a new team led by Guy Bartholomew and including Cecil King, a nephew of Lords Northcliffe and Rothermere, had completely restyled the two papers. Now they were aimed at younger, working class readers. Through a mixture of populist style and radical campaigning on social issues, they captured most of this market during the unsettled war years and increased their hold on it in the more prosperous times that followed. The combined circulation of both papers rose from around one million in the 1930s to more than five million in the 1960s.
From the large profits that flowed from this success, Cecil King, who became chairman in 1951, began to build a broad-ranging publishing group. It bought further newspapers, in Scotland and abroad, and a stake in one of the first commercial television companies in the United Kingdom, Associated TV, which proved to be highly lucrative. King next turned his attention to magazines. In 1958 he bought Amalgamated Press, the magazine group founded by his uncles, then Associated Iliffe Press, and finally Odhams Press. This included newspapers as well as the Odhams, Newnes, and Hulton magazine groups. When the Mirror and Pictorial companies became the International Publishing Corporation (IPC) in 1963, it was by far the largest publishing group in the United Kingdom. It had four mass circulation newspapers, all of the leading women’s magazines, a host of specialized magazines and directories, and no less than 25 printing plants.
Through this period of upheaval the Mirror and Pictorial companies had held on to their shares in Reed, which they saw as a substantial asset, to be protected and developed. When its future began to look uncertain, King obtained voting control of Reed by transferring to it all of the pulp and paper mills owned by Mirror and Pictorial. In 1963, while retaining the chairmanship of IPC, he made himself chairman of Reed and installed one of his senior managers, Don Ryder, as managing director.
Don Ryder was a former financial journalist who had shown a flair for management. Under his vigorous lead, Reed expanded and diversified. Its success in packaging and its growing overseas interests had already reduced its dependence on the U.K. newsprint and kraft business, and Ryder speeded up this process by a series of takeovers. First he bought companies in other branches of the paper and packaging industry. Then in 1965 he successfully bid for The Wall Paper Manufacturers (WPM), a large but sleepy company that then had a virtual monopoly of the wallpaper market in the United Kingdom. It also included a paint business and Sanderson fabrics. In the same year, Reed bought Polycell Holdings, which made Polyfilla and other decorating products. With these brands Reed acquired instant dominance of the fast-growing do-it-yourself market. Then, through further takeovers, Ryder took Reed into bathroom equipment and other building products. By 1970 the company could be described as a conglomerate. Its work force had grown to 56,000. The enlargement of its share capital had freed it from IPC’s control, and its market value had risen well above that of IPC.
Meanwhile, IPC had run into difficulties. The worst of these concerned the Daily Herald, a Labour Party newspaper owned jointly by Odhams and the trade unions, which lost money steadily. IPC persuaded the trade unions to relinquish their share and relaunched the paper as the Sun. This was no more successful and was finally sold to Rupert Murdoch at a very low price. In addition, there were serious losses on the printing side of IPC. Many of the works it had acquired in its takeovers were found to be obsolete and had to be closed down or modernized at further cost.
Finally, King’s activities created a problem. Instead of tackling the company’s financial difficulties, he became increasingly preoccupied with politics. The Daily Mirror had helped to get the Labour government elected in 1964, and afterward King felt that it should listen to his views. When it did not, he turned on Labour with irrational fury. In 1968, on the front page of the Daily Mirror, King demanded the prime minister’s resignation. King’s colleagues at IPC felt that he was misusing the paper’s power and forced him to resign.
King was succeeded by Hugh Cudlipp, a brilliant editor but a poor businessman. Afterward, he admitted that his chairmanship of IPC was “uninspired.” The company’s decline continued and takeover rumors began. As IPC still owned 27 percent of Reed, and Ryder could not allow it to fall into unfriendly hands, he and Cudlipp agreed in 1970 that Reed should take over IPC.
The combined company was named Reed International, incorporating art of IPC’s name, and its turnover made it the 30th largest U.K. company. Its work force numbered 85,000, and its business spanned more markets than at any time before or since. Reed’s position in most of these markets, however, was far from secure.
The U.K. paper business was still contracting, and Reed had to close down some operations in the 1970s. Its Canadian pulp and paper business was only intermittently profitable. The printing business inherited from IPC continued to lose money, even after the older plant was closed, and Reed failed to deal with its overmanning. WPM faced increasingly tough competition in wall coverings and saw its market share steadily erode. Newspaper circulations in the United Kingdom were declining and all of IPC’s nationals lost ground. It was the Sun’s recovery under Murdoch that hit the Mirror hardest.
In the early 1970s Ryder kept profits moving upward, by rationalizing in the weaker areas and increasing investment in the stronger ones. Indeed, his reputation as a manager was so impressive that at the end of 1974 he was plucked from Reed by the government to head its new National Enterprise Board. His successor, Alex Jarratt, continued to implement Ryder’s policy, but it was no longer working. In 1975–76 the company’s profits fell by more than 50 percent, and in the next few years made only a partial recovery.
Only in 1978 did the company recognize that the expansion policy initiated by Ryder had failed in the long run. Turnover had grown tenfold in his 11-year reign, but profits had grown much more slowly, and the outlook was poor. Jarratt decided to dispose of its unprofitable parts. Most of the overseas subsidiaries were sold, and the work force was reduced to 60,000. Nevertheless, 1980–81 saw another halving of profits, and another round of cutbacks began, this time mainly in the U.K. paper division.
In 1982 a new chief executive was appointed, Leslie Carpenter, who had come up through the magazine division of the company. The next annual report pointed out that 60 percent of the company’s trading profit was coming from the 40 percent of its turnover that lay in publishing. From that time onward, new investment was concentrated in this area. Local newspaper chains were acquired in the United Kingdom, together with publishing and exhibition companies in the United States, where the Cahners subsidiary, a magazine publisher wholly owned since 1977, was thriving.
At this time the company’s publishing activities still included U.K. national newspapers. Despite the introduction of photo-composition, these were far less profitable than the magazines. In 1984 Reed decided to float them as a separate company. “National newspapers do not sit easily in a large commercial corporation,” said Carpenter. The move was forestalled by a takeover bid for the newspaper group, which was accepted. This was from Robert Maxwell, who had already bought the Odhams gravure printing works from Reed.
Reed was thus left with a flourishing magazine business on both sides of the Atlantic and a miscellany of less profitable manufacturing businesses—the much-reduced paper and packaging division, as well as paints and building products. During Carpenter’s time as chief executive there were further disposals in the manufacturing area, and the final moves to abandon manufacturing were made under his successor, Peter Davis, who became chief executive in 1986.
The most significant change came in 1987. In that year the paints and do-it-yourself division was sold, and Octopus Publishing was bought. Octopus, which cost Reed £540 million, was the largest publishing business the company had acquired since IPC. It was a diversified international publishing group with a major presence in mass market nonfiction books, fiction and general trade books, children’s books, educational books at both the primary and secondary level, and in business and technical books, and greatly increased Reed’s strength in these areas. Its founder, Paul Hamlyn, moved to Reed with the business and became the company’s largest non-corporate shareholder.
Paper and packaging, for so long Reed’s sole business, was the last of the manufacturing divisions to go. It was bought in 1988 by its own management, taking the name Reedpack, and two years later was sold again to a Swedish company, Svenska Cellulosa. Reed also sold its North American paper group to Daishowa Paper Manufacturing Co., Ltd. in 1988.
With Reed now a purely publishing concern, Davis quickly moved to bolster the company’s position through acquisitions. In 1989 Reed purchased the U.K. consumer magazine TV Times. Later that same year, £535.4 million was spent to buy the Travel Information Group, a U.S. travel guide producer, from the News Corporation. The following year Reed enlarged its presence in the area of legal publishing with the purchase of the American firm Martindale-Hubbell. Martindale-Hubbell was subsequently merged into Reed’s existing legal publisher, R.R. Bowker, and complemented Butterworths, the legal publisher in the United Kingdom, also owned by Reed. In 1991 Marquis Who’s Who, publisher of biographical directories, and the National Register Publishing Co., publisher of business directories, were purchased from the Macmillan directory division for $145 million.
Davis became chairman of Reed in 1990. By the following year, thanks to Davis’s acquisitions, Reed had grown to become the third-largest publisher in Europe, trailing only Germany’s Bertelsmann and France’s Hachette. Although 1991 sales were only slightly higher than sales when Davis took over, profits had increased from £100 million to £251 million.
The Reed Elsevier Joint Venture: 1993
In 1992 Davis made his boldest move yet by engineering a merger with the Dutch publisher Elsevier N.V., which was then the world’s leading publisher of scientific journals. At the start of 1993, Reed International and Elsevier were transformed into holding companies, each holding equalized stakes in the joint venture. To reflect Reed’s larger capitalization, Reed gained a 5.8 percent stake in Elsevier. Both companies held a 50 percent stake in the newly formed Reed Elsevier plc, which became the parent company for all of Reed’s and Elsevier’s publishing businesses. Also newly created was Elsevier Reed Finance B.V., which became the parent company for the companies’ financing and treasury companies. Reed International held 46 percent of Elsevier Reed Finance, and Elsevier held 54 percent. The Reed Elsevier joint venture immediately vaulted into the list of the top ten publishing companies in the world, with combined annual revenue of $4.5 billion.
However, tensions between the Anglo and Dutch partners surfaced following the agreement, and though Reed Elsevier existed as a joint venture, Reed International and Elsevier did not formally merge. The most noteworthy dispute came in 1994 when Davis resigned in a power struggle won by the Dutch. Initially, Davis served as co-chairman of Reed Elsevier, along with Pierre Vinken, who was also chairman of Elsevier. Davis was slated to become sole chairman when Vinken retired in 1995. But the Dutch pushed for a collective style of leadership whereby the four-person executive committee (two from Reed, two from Elsevier) would manage collectively. When the board voted for the Dutch approach, Davis resigned and was succeeded as Reed International chairman by the second-in-command, Ian Irvine.
Meanwhile, Reed Elsevier concluded several significant acquisitions. In 1993 Official Airline Guides was bought from the bankrupt Maxwell for $425 million. The American market was targeted next. First, both Reed International and Elsevier had their stock placed on the New York Stock Exchange. Later that year, Reed Elsevier took a huge plunge into the online publishing world by acquiring LEXIS-NEXIS, which offered a number of online information services in the legal, news, and business fields, from Mead Corp. for $1.5 billion. The purchase instantly doubled the amount of Reed Elsevier revenue derived from electronic publishing from ten to 20 percent.
Strengthening and Focusing Core Operations: 1995 and Beyond
By 1995 Reed Elsevier was operating in four main publishing segments: scientific, professional, business, and consumer. The consumer segment, which included magazines, newspapers, and books, was the most troublesome of these and did not fit well with the other three segments. That year Reed Elsevier decided to divest of non-core businesses to focus on building its scientific, business, and professional divisions. As a result, newspaper businesses in the Netherlands and the United Kingdom and consumer magazines in the United States and the Netherlands were sold in five separate transactions for $1.1 billion in late 1995. Reed Elsevier also announced plans to sell its consumer book publishing business, which the company eventually completed in 1998 when it sold IPC Magazines, the U.K. magazine publishing arm.
Reed Elsevier’s scientific division provided information on the life sciences, chemistry, and physical sciences and was a global leader in the scientific publishing category. To maintain its leadership position, Reed Elsevier adopted an aggressive acquisition strategy and focused on internal growth as well. In 1997 the company purchased MDL Information Systems, Inc., a U.S. software systems and information database developer geared toward the scientific community, and the following year made several journal acquisitions, including the American Journal of Ophthalmology and MAGMA, the journal of the European Society for Magnetic Resonance in Medicine and Biology. The purchase of JAI Press/Ablex Publishing boosted Reed Elsevier’s offerings in the “soft” sciences, which included social sciences, business, and economics. Reed Elsevier also acquired the Beilstein Database, an online database of about eight million chemical structures, in 1998, allowing the company to better serve science specialists.
In 1998 Reed Elsevier launched ScienceDirect, an online scientific database that contained nearly 400,000 scientific articles from more than 1,000 journals. The company also introduced a number of new titles, including such specialized journals as Materials Science, which focused on semiconductor processing, Ocean Modelling, a journal covering ocean and atmospheric data management, Environmental Science and Policy, and Integrative Medicine, which offered the latest developments in alternative and conventional medicine. In Europe Reed Elsevier launched EMCALL, an electronic service that linked drug companies with medical experts.
Reed Elsevier worked to further enhance its offerings in the legal category, particularly in order to transform LEXIS-NEXIS into a full-service provider in the legal information market. Reed Elsevier formed a joint venture with Times Mirror Company in 1996 to own and manage Shepard’s Company, a U.S. legal citation business. A year later Reed Elsevier acquired Tolley Publishing Company, a British publisher of legal and tax publications, and formed LEXIS-NEXIS Europe to serve European markets. In 1998 the company used the proceeds from the sale of the consumer books division to acquire Matthew Bender & Company Inc., a U.S. publisher of legal information, for $1.65 billion. The firm also acquired the remaining 50 percent interest in Shepard’s from Times Mirror.
LEXIS-NEXIS continued to refine its services in the late 1990s to maintain its dominance in the highly competitive online information services category. LEXIS Online, which handled legal information, implemented improvements and new features to its web browser product, LEXIS-NEXIS Xchange. NEXIS Online, the business arm, launched LEXIS-NEXIS Universe, a web browser product geared toward the business market. Other online services launched in the legal field in 1998 included lawyers.com, a service that linked small law firms with prospective clients, and Butterworth Direct, an online legal information service in the U.K.
Reed Elsevier’s business group published a wide array of business magazines, newspapers, and directories and also provided online services and organized international events. Demand in the business information industry continued to grow, and Reed Elsevier’s strategy was to provide specialized products and information to strengthen and expand its reach. In 1997 the company acquired Chilton Business Group, a U.S. business information publishing company, for US$447 million. Included in the purchase were Chilton’s research division, which provided research services to U.S. companies, Chilton’s exhibitions group, and the trade magazines division, which included 39 titles. Chilton was merged with Reed Elsevier’s Cahners Publishing Company to form Cahners Business Information. The purchase boosted Cahners’ trade magazine offerings to more than 130.
In the late 1990s the business group extended its reach in various sectors. For example, in 1998 Cahners introduced Home Accents Today and Kids Today to enhance the company’s products in the retail furnishing market, which included Furniture Today and Home Textiles Today. The business division also continued to develop its electronic publishing operations in order to provide a growing number of titles through electronic delivery, a fast-growing medium. One web site, Manufacturing Marketplace, for instance, signed up more than 150,000 registered users in a year. Reed Elsevier’s exhibition group showed strong growth as well, though demand in Asia fell as a result of poor economic conditions. In 1998 the exhibition division launched 26 new shows and signed on several new events, including the Cannes Boat Show and two golf equipment events from the Professional Golfers Association of America.
Though Reed Elsevier demonstrated tireless activity since its founding in 1993, the company did not face an entirely smooth road as it endeavored to streamline and strengthen operations. In 1997 the company revealed a proposed merger with Wolters Kluwer N.V., renewing Elsevier’s old interest in acquiring the Dutch publisher. One year later, however, the company announced that merger talks had been abandoned because the companies were unable to reach mutually agreeable terms. Poor market conditions in the late 1990s affected some of Reed Elsevier’s operations, and the rapid changes and volatility of the publishing and information services markets continued to provide challenges. The company was determined to rise to the challenges, however, and planned to continue growing and increase profitability through acquisitions, internal growth, and innovation. To further prepare for the future, Reed Elsevier abandoned its collective management structure in 1998 and opted to appoint a single CEO. Crispin Davis formally became the company’s new CEO in September 1999, as well as the CEO of Reed International plc and chairman of the executive board of Elsevier N.V.
Scientific; Professional; Business.
Principal Operating Units
Elsevier Reed Finance BV (The Netherlands); Reed Elsevier Legal Division; Butterworths; Cahners Business Information (United States); Cahners Travel Group (United States); Editions du Juris-Classeur (France); Editions Scientifiques et Medicales (France); Elsevier Business Information (The Netherlands); Elsevier Opleidingen (The Netherlands); Elsevier Science (The Netherlands); Elsevier Science); Elsevier Science Inc. (United States); LEXIS-NEXIS (United States); Matthew Bender (United States); OAG Worldwide; Reed Business Information; Reed Educational & Professional Publishing; Reed Exhibition Companies; Springhouse Corporation (United States); Excerpta Medica Communications; MDL Information Systems, Inc.; LEXIS Law Publishing; Shepard’s Company; Martindale-Hubbell; Congressional Information Services; REZsolutions, Inc. (United States; 67%); Tolley Publishing; Dott. A. Giuffre Editore (Italy; 40%); Verlag Orac (Austria); Stampfli Verlag (Switzerland; 40%); Wydawnictwa Prawnicze PWN (Poland; 50%).
Reuters Group plc; The Thomson Corporation; Wolters Kluwer
Bannon, Lisa, and Kimberley A. Strassel, “Reed Elsevier to Buy Two Units of Times Mirror,” Wall Street Journal, April 28, 1998, p. A3.
“A Bigger, Better? Reed and Elsevier,” Economist, September 19, 1992, p. 83.
Blackhurst, Chris, “Dinosaur’s New Lease on Life,” Management Today, January 1992, p. 12.
Blankenhorn, Dana, “Reed Elsevier Press On; New Name Close,” Business Marketing, February 1, 1998, p. 2.
Chapters from Our History, London: Reed International, 1990.
Evans, Richard, “Playing House: After Nearly Three Years, Reed and Elsevier Still Haven’t Consummated Their Marriage,” Financial World, August 1, 1995, p. 37.
Hayes, John R., “The Internet’s First Victim?,” Forbes, December 18, 1995, p. 200.
Hochwald, Lambeth, “Reed Elsevier: The Dancing Elephant,” Folio: The Magazine for Magazine Management, September 1, 1994, p. 58.
House, Richard, “A Marriage for the‘90s,” Institutional Investor, February 1993, p. 99.
Hudson, Richard L., “Reed Elsevier Enters Big Leagues of OnLine Services,” Wall Street Journal, October 6, 1994, p. B4.
Marcom, John Jr., “Down to Earth, Mostly,” Forbes, October 29, 1990, pp. 57, 61.
Pope, Kyle, “Reed Elsevier May Use Its Cash Hoard on Acquisitions, Possibly in the U.S.,” Wall Street Journal, March 14, 1996, p. A15.
Prokesch, Steven, “Britain’s Low-Profile Publishing Giant: Reed International, Big in America, Treads Carefully as It Grows,” New York Times, February 9, 1992, p. F5.
Reed International: Developments in a Company History, 1960–1974, London: Reed International, 1980.
Skeel, Shirley, “Reed All About It,” Management Today, October 1992, p. 62.
Steinmetz, Greg, and Raju Narisetti, “Reed Elsevier Wins Bidding for Lexis/Nexis,” Wall Street Journal, October 5, 1994, pp. A3,
All. Strassel, Kimberley A., “Reed Elsevier’s CEO Search Hurts Stock,” Wall Street Journal Europe, April 8, 1999, p. 13.
Sykes, Philip, Albert Reed and the Creation of a Paper Business, 1860–1960, London: Reed International, 1980.
“Which Way Will Davis Drive Reed?”, Media Week, July 30, 1999, p. 12.
Yates, Andrew, “Corporate Profile: Reed This and Weep,” Independent (London), June 16, 1999, p. 3.
—Patrick Heenan and John Swan
—updated by Mariko Fujinaka