Two reports: "M & A activity wilts," "industry-wide revenues jump but operating income down".

"Newsletter M & A activity wilted with the economy in the third quarter of this year versus the same period last year," reports the investment banking firm Whitestone Communications Inc., which tracks the pace of deals for its annual publication, Who's Buying Whom.

"The lead deal of the quarter was Commonwealth Business Media's purchase of the Marquis Who's ho and other titles," reports Whitestone president Baran Rosen. Other noteworthy transactions of the quarter were:

* The Gale Group, of Thomson Corp., acquiring European Research and Development Database from Elsevier Science, of Reed Elsevier.

* Wicks Business Information acquiring eight newsletters from Economics Press.

"While newsletters and directories tend to be less susceptible to recessions than advertising-driven publishing businesses, the current recession is having an impact on the level of M & A deals in the field," Rosen notes. "The September 11 terrorist attacks also chilled the deal environment and I know of at least one significant transaction that was just about to close at that time but the buyer walked at the last minute due to economic uncertainty."

Whitestone, 1350 Avenue of the Americas, New York, NY 10019, 212-957-7100, fax [phone].

Veronis Suhler industry report

Veronis Suhler's annual Communications Industry Report, just released, reports that industry-wide revenues jumped more than 18 percent, reaching $276 billion in 2000, but overall operating income was dragged down by 48 percent, to $11.8 billion.

The decrease in operating income and cash flow was attributed to "heavy losses generate by internet companies and by the internet investments of traditional media companies, and as a result of increased acquisitions," according to the report.

Of the 13 media segments covered by the report, here are summaries of the three of most interest to newsletter and specialized information publishers:

* Business-to Business Communications: "This segment enjoyed a strong first three quarters of the year before the economic slowdown began, as overall revenues advanced 6.2 percent, to $7.6 billion.

"The five largest companies were Reed Elsevier, $2.5 billion; United Business Media, $2.4 billion; McGraw-Hill, $1 billion; Primedia, $518.5 million; and Ziff Davis Media, $470.7 million."

* Professional, Educational and Training Media: "With a strong economy for most of the year, growing enrollments and plantiful government funding, revenues in this segment increased 17.2 percent.

"Leading companies were Pearson Education, $3.1 billion; Harcourt General, $2.4 billion; Thomson Corporaton, $2.1 billion; McGraw-Hill, $2 billion; and Wolters Kluwer, $1 billion."

* Business Information Services: "This sector was profoundly affected by the stock-market free fall that occurred in the second quarter of 2000, as the pool of internet and software companies providing tools and services to the market shrank significantly, with widespread stock devaluations resulting in mass bankruptcy filings and closures. Yet adjusted revenues rose 19 percent, to $28 billion.

"The leading providers were Reuters, $5.8 billion; Thomson Corporation, $4.4 billion; and Reed Elsevier, $3.1 billion."

Veronis Suhler, 350 Park Ave., New York. NY 10022, 212-935-4990.