Investment banker: "organic growth" seems to be working best for newsletter publishers.

"The bigger players in the newsletter field are growing organically--raising prices in the mid to high single digits--and subscribers aren't complaining," said Mark Young, senior vice president at Citizens Bank, in Boston. "They seem to be getting away with it," he added.

"In terms of 2003, from where we sit, the clients we interact with had a good year. One company who struggled in 2002 changed their product mix; they melded two products into one and then raised the price. People are also being much more careful with marketing costs.

"What I'm seeing is that people who are doing okay are launching new products and fine-tuning existing products. Again, strategic pricing of underperforming assets--specific titles or groups of titles--is key," Young said.

Mergers and acquisitions in 2003

Asked about newsletter M & A initiatives, Young said he didn't see much change on that front in 2003--"although there has been much M & A activity in the trade and consumer magazine fields. Newsletters sellers are still unrealistic about what their companies are worth in the market," he said, repeating what we've heard from other brokers and investment bankers.

The M & A advisory firm Whitestone Communications echoed Mark Young's observations. "While 2003 finished about even with the prior year, the deal pace picked up in the fourth quarter and we see signs of expanded activity for 2004," said Whitestone associate Jenifer Lindenman. "The stock market is running at recent record highs and buyers are feeeling good about the near-term future of the economy. This means more deals are going to be done," she said.

Lindenman said that signs of this increased interest include:

* The 2003 fourth quarter had six deals, double the number for the same period in 2002.

* In the U.K., Informa Group announced the largest newsletter acquisition deal in recent years--the purchase of PJB Publications for $210.5 million, at a high multiple of 13.2 times operating profit.

"The price paid for PJB is remarkable when you consider PJB results have been declining for the last few years," Lindenman said. "Also, Informa is taking a big step with this deal in that it is one of the largest, if not the largest, single deal it has ever done. They are clearly confident they can change the direction of the business."

Lindenman concluded, "Despite these signs of life, we still have a long way to go to get back to the heady days of 2000."

Newsletter companies for sale

Mark Young also noted that three major newsletter companies are up for sale--including, once again, Phillips International Inc.

We ran that rumor by PPI corporate vice president John Farley, who responded, "We have been in discussions about the sale of Phillips Health but I cannot comment further." PPI consists of Phillips Health LLC's six consumer newsletters and Phillips Investment Resources LLC's 15 investment advisory and mutual fund newsletters.

Citizens Bank, 53 State St., 8th Floor, MBS 880, Boston, MA 02109, 617-994-7045, fax [phone], [e-mail]

Whitestone Communications, 1350 Avenue of the Americas, #1200, New York, NY 10019, 212-957-7100, fax [phone], www.whitestonecommunications.com