Incorporated: 1967 as Treasure Chest Advertising Company
Sales: $1.51 billion (2005)
NAIC: 323115 Digital Printing; 323119 Other Commercial Printing; 323122 Prepress Services; 541613 Marketing Consulting Services; 541830 Media Buying Agencies; 541860 Direct Mail Advertising; 541870 Advertising Material Distribution Services; 541890 Other Services Related to Advertising; 541910 Marketing Research and Public Opinion Polling; 541922 Commercial Photography
Vertis Communications provides marketing services for more than 3,000 clients in diverse industries, including retail, food and grocery, consumer packaged goods, financial services, durable goods and manufacturing, healthcare, publishing, newspapers, advertising, and technology. Its design, production, and distribution services comprise market research, media planning, advertising production, digital production, and fulfillment services. The company also produces a variety of newspaper inserts, including color comics, TV magazines, and supplements, as well as provides direct mail, package design, interactive marketing, and media planning services to clients in the United States and United Kingdom. Vertis Communications is owned by an investor group led by Thomas H. Lee Company and Evercore Partners.
The history of Vertis Communications can be traced through that of Big Flower Holdings and its precursor Treasure Chest (TC) Advertising. In 1967 brothers Robert and Paul Milhous founded Treasure Chest Advertising in Glendora, California, as a publisher of the Treasure Chest of Values, a weekly shopping newspaper. Within five years the company was operating six U.S. plants that were printing advertising circulars. In 1982, Treasure Chest expanded into printing color comics and TV program listings, and by the end of fiscal 1983 the company reached sales of $350 million. In 1983, Donald Roland also was hired as vice-president of operations as part of Treasure Chest's transition to a professional management team. His hiring also stemmed from Robert Milhous who had a passion for boats and who wanted to concentrate on building the world's largest sloop, rather than focus full-time on his corporate responsibilities. Roland, who later would play a critical role in the company's development, came to Treasure Chest after 17 years with Times Mirror Press. By 1993, the printing company was running 15 plants with sales of $560 million when the Milhous brothers sold it in August of that year to an investor group for about $235 million. Leading the investment group was investment banker Theodore Ammon, who gave up a partnership in Kohlberg Kravis Roberts to found BFP Holdings in 1993.
COMPANY GROWS THROUGH ACQUISITIONS
In 1994, Big Flower Press, Inc., a subsidiary of BFP Holdings, made two other acquisitions, Retail Graphic Holding and KTB Associates, which considerably expanded its market presence in the advertising insert and newspaper TV magazine segments. Despite these acquisitions, Treasure Chest Advertising Company stood as Big Flower's largest operating unit. In November 1995, Big Flower went public selling 8.3 million shares, raising about $100 million. The newly public company, renamed Big Flower Press Holdings, Inc., continued to pursue an aggressive acquisitions strategy that was making it a nationwide printing network. In December 1995, it acquired Laser Tech Color of Irving, Texas, a digital graphics and electronic prepress company with revenues of $23 million. Big Flower purchased Webcraft Technologies Inc. a privately held direct mail marketing company, for $107 million in cash in February 1996. Webcraft focused on specialty printing markets, comprising direct mail, fragrance samplers, promotional games and stamps, and lottery tickets. The company sold Webcraft's lottery unit later that year to Canadian printing company Pollard Banknote Ltd over concerns that high security costs and competitive bidding were lowering margins of the lottery business. In October 1996, Big Flower bought Scanforms Inc., a Bristol, Pennsylvania, advertising company, in a stock transaction valued at $26.5 million. By the end of fiscal year 1996, Big Flower reached $1 billion in sales, just three years after its founding. It then acquired Designer Color Systems and Digital Dimensions, Inc., both of St, Louis, in 1997. The acquisitions enabled Big Flower to expand its geographic presence in the retail and prepress markets to the Midwest. The deals also complemented its acquisition of Pacific Color Connection, a prepress firm with three locations in California that added Internet services to its portfolio.
COMPANY EXPANDS INTERNATIONALLY AND ENTERS THE INTERNET ECONOMY
In 1997, Big Flower continued its rapid expansion and also ventured into the international arena, acquiring U.K.-based Olwen Direct Mail Ltd., a privately owned direct marketing company with 1996 sales of about $30 million. Headquartered in South London, Owen specialized in full-service direct mail preparation, including prepress, printing, personalization, finishing and mailing. It also provided database services, such as response analysis and target customer profiling, as well as ran a database management operation and international direct mail group in Baltimore, Maryland. Big Flower, moreover, added two more companies in 1997, privately owned Golden, Colorado-based Columbine JDS Systems Inc. and Riverside Publishing Co., a unit of Brown Printing Co. of Waseca, Minnesota. While the Riverside purchase served to expand Big Flower's printed advertising-insert business, the Columbine JDS acquisition enabled it to increase its presence in electronic media advertising services. That same year, Big Flower bought Gamma One, Inc., one of New England's leading digital premedia service companies. The acquisition of Gamma One, which prepared digital images for use in advertising, bolstered Big Flower's Laser Tech imaging division, particularly in the New England and New York markets. In December 1997, BFP Holdings underwent a legal restructuring, changing its name to Big Flower Holdings Inc. and emerging as the parent of Big Flower Press Holdings.
Vertis Communications works with clients to turn their most complex marketing ideas into realities. A full-service communications firm, Vertis Communications offers our clients an impressive range of capabilities that combine to handle large, complicated, time-sensitive assignments with ease. Our strategic thinking, marketing savvy, and proven printing expertise combine seamlessly to deliver results—effectively and efficiently—so our clients are free to focus on their business.
The company strengthened its European presence in 1998 with the acquisition of two prepublication service providers, Production Response Systems and Lifeboat Matey, which operated as the Fusion Group. In addition, Big Flower made a series of strategic investments in Internet companies through its XL Ventures unit. The company bought 1.8 million shares of 24/7 Media, a newly formed Internet advertising firm based in New York. 24/7 Media provided advertising sales and related services for more than 100 web sites. The firm's clients included AT&T WorldNet, Better Homes and Gardens Online, Columbia House, Comedy Central, Reader's Digest, and Rolling Stone. By mid April 1999, Big Flower also had purchased 737,864 shares of Miningco.com, a provider of Net news, information, and entertainment, as well as bought into several private companies, including Andromedia, Worldgate Communications, and NuTel Communications. These strategic investments reflected Big Flower's aggressive move into the new Internet economy. In 1998, Big Flower also acquired Reach America, a software development and database marketing firm; Enterton Group, a digital prepublication company; and ColorStream, a marketing services company. In 1999, Big Flower reached sales exceeding $2 billion before an investment group led by leveraged-buyout firm Thomas H. Lee Co. bought it for approximately $800 million.
RESTRUCTURING FOR THE 21ST CENTURY
In 2000, Big Flower went private, consolidated its major operating units (TC Advertising, The LTC Group, and Webcraft), relocated its headquarters to Baltimore, and changed its name to Vertis Inc. with the aim of reinventing itself. With the restructuring, CEO Ed Reilly resigned and was replaced by Don Roland, who joined TC Advertising in 1983 and became its CEO in 1995. With Roland in charge, in April 2001 Vertis announced a new corporate structure organized around six distinctive operating units to deliver its full range of services. The six business units included Vertis Advertising Production Services, Vertis Retail & Newspapers Services, Vertis Direct Marketing Services, Vertis Media & Marketing Services, Vertis Newspaper Premedia Services, and Vertis Digital Production Services.
With the trend of consolidation in the advertising-services business, McClatchy, the newspaper publisher, agreed in April 2003 to sell its sales and marketing business, The Newspaper Network (TNN), in two pieces to the Associated Press and Vertis. Under the terms of the deal, AP would get TNN's ad-processing unit, while Vertis would acquire its sales, marketing, and media-planning assets. The integration of TNN's media operations with Vertis' Media & Marketing Services established Vertis as the second largest U.S. newspaper media-buying agency with billings of more than $1 billion annually. With its aggressive strategy of acquisitions, by 2003 Vertis had become a global powerhouse in the integrated marketing and advertising solutions business, combining advertising, direct marketing, media, imaging, and progressive technology. The company had production and sales offices throughout the United States and United Kingdom, serving local, regional, national, and international companies across a variety of industries. Its products and services comprised consumer and media research, media planning and placement, creative services, digital media production, advertising insert programs, fully integrated direct marketing programs, circulation-building newspaper products and interactive marketing.
- Treasure Chest Advertising Company is founded by Paul and Robert Milhous.
- Treasure Chest is sold to BFP Holdings, the parent of Big Flower Press Inc.
- Company goes public.
- Company goes international with the acquisition of U.K.-based Owen Direct Mail Ltd. and undergoes restructuring.
- Company buys European companies, Production Response Systems and Lifeboat Matey; Big Flower invests in Internet company 24/7 Media; acquires Reach America, Enterton Group, and Color Stream.
- Big Flower is acquired by group led by leveraged-buyout firm Thomas H. Lee Co.
- Company goes private, moves headquarters to Baltimore, and changes name to Vertis.
- Vertis buys sales, marketing, and media-planning assets of The Newspaper Network.
- Vertis divests Fusion Premedia Group Ltd. and Pismo Ltd.
In 2005, Vertis began another restructuring aimed at regionalizing and streamlining operations. The 2005 program included workforce reductions of approximately 490 employees and the closure of six premedia facilities, one advertising inserts warehouse, and two regional offices. In December 2005, Vertis also announced the divestiture of Fusion Premedia Group Ltd. and Pismo Ltd., its U.K. premedia services group, to Tag, an international design and production agency. The company spun off its noncore businesses in the United Kingdom to focus exclusively on expansion in North America. Although the focus was on streamlining its business, the company nevertheless acquired Elite Mailing and Fulfillment Services, Inc., for $3.3 million, adding the firm to its North American operations in January 2005. For fiscal year 2005, the company's net sales amounted to $1.5 billion, an increase of $3.4 million over 2004. In July 2006, Vertis announced the rebranding of the company as Vertis Communications. The new name and image underscored Vertis' emphasis on communications services in the marketing, advertising, and printing industries. The newly renamed company planned on maintaining its focus on key industries, including retail, food and grocery, consumer packaged goods, financial services, durable goods and manufacturing, healthcare, publishing, newspapers, advertising agencies, and technology. In September 2006, Vertis Communications reached agreement with a wholly owned subsidiary of Visant Corporation to sell its fragrance division. Although the fragrance division continued to be profitable, Vertis Communication no longer considered it a core component of its business strategy and marketing efforts.
Bruce P. Montgomery
PRINCIPAL OPERATING UNITS
Vertis Direct; Vertis Research; Vertis Consulting; Vertis Creative; Vertis Technology; Vertis Media.
Harte-Hanks Inc.; Valassis Communications Inc.
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