Acquisitions

At first blush, it appears almost ludicrous that Microsoft Corporation is offering an eye-popping $26 billion+ to acquire LinkedIn Corporation.

The dollar figure far eclipses any previous Microsoft acquisition — including the $9 billion+ it paid for Nokia Corporation in 2014, not to mention what the company paid for Yammer and Skype.

What’s also acknowledged is that none of those earlier acquisitions did all that much to further Microsoft’s digital and social credentials — and in the case of Nokia, the financial write-downs Microsoft has recorded have actually exceeded Nokia’s purchase price.

So what’s different about LinkedIn — and why does Microsoft feel that the synergies will work to its advantage better this time?

In a recent Wall Street Journal column, technology journalist Christopher Mims noted that such synergies do exist — and in a much bigger way.

That includes Microsoft Office, the productivity suite that’s now delivered almost exclusively online. And then there’s LinkedIn’s database of over 400 million subscriber professionals.

Put those two elements together with a strong strategic vision, and you have the potential for some pretty amazing synergies.

When you think about it, LinkedIn’s users are essentially Microsoft’s core demographic. And it isn’t something that’s replicated anywhere else in Cyberspace. Here’s Microsoft’s CEO Satya Nadella talking: “It’s really the coming together of the professional cloud and the professional network.”

Acting on its own, LinkedIn hasn’t been all that successful in leveraging what is arguably the most comprehensive and powerful database of business professionals ever compiled in the history of mankind.

While it consists of self-contributed information that hasn’t been “vetted” by outside parties, it’s still the single most comprehensive and valuable repository of information about business professionals — anywhere in the world.

I view the dynamics of LinkedIn as something like the Wikipedia. Wikipedia has become so pervasive, it has driven traditional encyclopedias from the scene. And while we all know that there can be misstatements of fact — or omissions of facts — from Wikipedia entries, it’s also become the quickest and easiest place to go for information that’s “accurate enough and complete enough” for most any type of informational query.

In similar fashion, LinkedIn is making personnel databases like Dun & Bradstreet that are less robust and accessible only by subscription increasingly obsolete.

And yet … with all of this powerful data at its fingertips, up to now LinkedIn hasn’t been all that effective in leveraging its vast trove of data in way that goes much beyond using it as a personnel recruitment tool.

Try as LinkedIn might to create “stickiness” by offering communities of users based on job function, shared industry involvement and the like, to this day only about one-fourth of LinkedIn’s ~400 million users come to the site on a monthly basis.

The reality is that the vast majority of people continue to access LinkedIn only when they’re in the job market — either as a seeker of talent or seeking a new position for themselves.

In the wake of the pending Microsoft acquisition, those dynamics could change quickly — and in a big way.

One way is in how LinkedIn could begin to provide a big boost to Microsoft’s CRM services. Many companies use such products to identify and track sales leads; in fact, having such a tool is almost a prerequisite for any successful business of any size at all.

As of today, Microsoft languishes behind three other CRM software providers (Salesforce.com, SAP and Oracle). LinkedIn’s own product (LinkedIn Sales Navigator) is essentially an also-ran in the category.

But bringing together LinkedIn’s extensive personnel database with Microsoft’s CRM capabilities looks to deliver data and reach that would be the envy of anyone in the market.

So … it is certainly possible to understand why Microsoft might see LinkedIn as its strategic “ticket to ride” in the coming decades. But two questions remain:

Does the acquisition business potential match with the $26 billion+ Microsoft is paying for the buying LinkedIn?
Will Microsoft do a better job of integrating LinkedIn with its other products and services when compared to the disappointing results resulting from its other acquisitions?

We’ll need to check back over the coming months to see how things are come together.

If the imminent acquisition of the magazine portfolio of Time, Inc. by publishing giant Meredith Corporation goes through as planned, it will mark a symbolic end to the dominance of New York City in the consumer magazine publishing game.

And for this long run to end at the hands of a family-owned publishing company based in Des Moines, Iowa seems pretty ironic: Manhattan’s fashionable streets vanquished by the cornfields of Iowa!

You have to go back nearly a century to see how things got started. The year 1922 saw the founding of Time magazine in New York City. That same year, out in Iowa, Edwin Thomas Meredith started a publication called Fruit, Garden & Home. That magazine would be renamed Better Homes & Gardens shortly thereafter.

Today, BHG is one of the biggest consumer magazine titles in the United States. It’s a flagship brand among a well-known group of titles published by Meredith Corporation including American Baby, Family Circle, Ladies Home Journal, Parents, Family Fun, Every Day with Rachel Ray and Eating Well.

These publications and others help give Meredith a commanding edge in the important women’s reader demographic. And now, the pending acquisition of the Time media properties – including Fortune, Sports Illustrated and People magazine in addition to Time – gives Meredith important penetration into other readership sectors as well.

Meredith’s recent growth strategies aren’t confined to print alone. It’s also signed licensing agreements with retailers like Wal-Mart for selling home and outdoor products. The company seems intent on generating income from a group of strong, powerful brands that transcends merely print to encompass merchandising and other marketing schemes.

There may be delicious irony in the fact that the “nerve center” for consumer and news publications may soon be migrating from New York City to Des Moines.

“The revenge of the hayseeds,” as it were.

But in another way, perhaps it’s only fitting. It could be argued that New York City is no longer the “intellectual umbilical cord” for news and consumer style trends – and hasn’t been for some time; its monopoly on being the arbiter of such things disappeared years ago.

Besides, Des Moines is probably a lot more representative of the readership of U.S. consumer magazines than Manhattan Island is.

What do analysts think of Meredith’s moves on Time? Keach Hagey, a reporter for The Wall Street Journal, spoke with industry analysts and found that many expect Meredith to make important moves to streamline operations and increase efficiencies. These actions will likely trim ~25% of operating expenses from the merged business.

Hagey goes on to report, “They believe Meredith’s no-nonsense culture and roots in consumer marketing might finally enable the kind of cross-brand advertising buying that Time, Inc.’s titles always seemed ripe for, but only just started to move into.”

If Meredith indeed has a collaborative, team-oriented culture that minimizes office politics, that seems like a better recipe for success in a tough business environment like consumer magazine publishing is today.