B2B: With McGraw-Hill Construction being auctioned, will ENR’s 100 year+ history of publishing be in jeopardy?
Many of the major construction trade magazines have changed hands in the past few years as PEs exit their investments and Reed Elsevier leaves the U.S. market
With the sale of Cygnus Business Media’s heavy contraction group, the construction industry sees yet another of its big trade publications change hands. The next shoe to drop will be Engineering News-Record, the iconic weekly magazine that can trace its history back to 1874.
The construction industry, from the perspective of B2B publishers, can be broken out into many different categories: construction equipment, housing, architecture, engineering, as well as other segments like commercial construction and such.
The construction equipment segment was, for a long time, dominated by the magazine appropriately named Construction Equipment. In the ’80s and ’90s, the magazine not only received the most paid advertising, but had lucrative relations with trade shows like ConExpo, producing the show daily. CE has been part of the Cahners at the time Reed International bought the publishing company and began expanding its holding by buying other companies such as Chicago-based Chilton Business Group in 1997 and Construction Market Data in early 2000 for just under $300 million.
But the good times turned bad, and Reed decided to begin divesting itself of its U.S. B2B properties. In April of 2010 came word that RBI, once the largest publisher of B2B magazines in the U.S., would shutter 23 trade publications it had not been able to sell as part of the mass sell off. Incredibly CE was one of those titles. Eventually CE and the magazines part of its group were picked up by what is now SGC Horizon.
Why couldn’t Reed find a buyer? The reason is that many of the private equity firms that had invested in B2B were on the way out and had no interest in acquisitions or another investment in trade publishing. As a result, the only a title could be saved was if the magazine group’s management team could find independent financing – a situation that occurred with the Cygnus construction titles which include Equipment Today.
The other major construction equipment magazine is Equipment World, published by Randall-Reilly. It was able to take advantage of the decline of RBI. Equipment World was published as part of Randall Publishing. Founded by Henry Pettus Randall Jr in 1936, the company was family owned until the death of Pettus Randall in 2002. Mike Reilly, who had been with the company, became president and eventually Wachovia Capital Partners bought out the family to create Randall-Reilly in 2005. Only a couple of years later Investcorp bought the company and is the owner today.
That means all three top magazines in the field have changed hands, one way or another, over the past few years, though Equipment World has had the same publishing team throughout.
Now McGraw-Hill Financial is in the midst of an effort to sell off McGraw-Hill Construction. The group, whose revenue is estimated to be about $170 million a year, is made up of the Dodge Products and media properties including Sweets, Architectural Record and Engineering News-Record (ENR).
As mentioned above, ENR’s history goes back a long time – to 1874 with the founding of two separate products Engineer & Surveyor and The Plumber and Sanitary Engineer. In 1887 the magazine that would become ENR was known as Engineering and Building Record, a few years later simply Engineering Record. In 1901 the newspaper, it was not yet a magazine, was sold to McGraw Publishing Company – in 1917 James H. McGraw merged the McGraw and the Hill Publishing Companies. That same year Engineering Record was merged with the Hill construction publication too become Engineering News-Record.
ENR, for those of us in B2B, holds a special place for many reasons. First, it is a weekly. Second, it is a paid publication like AdAge. For year its circulation was over 70,000 paid and reached all the top management at construction companies in the U.S. and internationally. Since the fiscal crisis, however, the magazine’s paid circulation has slipped to where it is now at just over 50K paid, with an additional almost 10,000 of non-paid, qualified circulation added in.
The third reason B2B publishers respect ENR is that it has always published with strong, reliable, and honest editorial. Its editors have been fixtures in the industry, especially in the east coast trades, and when the editor of ENR spoke at an industry event it was not considered a promotion for the magazine but an honest discussion of construction industry trends. (I attended a major conference in the late ’90s where the editor of ENR spoke and the universal reaction was “that pompous ass!” followed by a grudging admission that he know what he was saying and no one would argue with his views.)McGraw-Hill, too, has changed, becoming McGraw-Hill Financial – reinforcing its mission to be a financial information powerhouse, not a publisher. BusinessWeek was sold, for instance, in 2009 to Bloomberg and is now Businessweek Bloomberg. BusinessWeek and ENR were often redesigned almost in unison, and so the loss of BusinessWeek must have felt like a very bad omen for the staff of ENR.
A couple of weeks ago The Deal said that the auction for McGraw-Hill Construction was nearing an end, with private equity firms expected to be the main bidders. At $170 million in revenue, there are no big B2Bs left would would be interested in McGraw-Hill Construction for its publishing properties.
Both Reed and McGraw-Hill owned both data and magazine properties in the construction field. But Reed never incorporated CMD with its magazines in any meaningful way. Despite the obvious advantages of having construction data at hand, Reed’s publishers never really grasped access to data and so publishing remained housed in Des Plaines, Illinois (later Oak Brook) and data in Atlanta. McGraw-Hill, however, at least merged their properties into the same group.
Depending on the buyer, ENR and other publishing products could be endangered. But ENR is a NYC institution, and all the big PEs are NYC companies. It may be that ENR, and the other publishing products, will find a good home. We will know soon.