Since Exponent Private Equity (EPE) forked out £235m to buy the Times Education Supplement (TES) we have been waiting to see how the new owners and management plan to stamp their authority on the business. First came the appointment of Simon Taylerson as Group Advertising Director, next was the announcement by TSL Education (TSL) Chairman Bernard Gray of a £5m redesign and rebrand of the TES from this autumn into a full-colour, tabloid format magazine.

While there are several aspects to the rebrand and relaunch the primary target audiences remain the same – teachers and educationalists. What EPE are banking on with their changes is that these will stop advertisers switching their spending to online media outlets. This issue is thought to be the reason News Corporation decided to sell the TES, the only newspaper the group has ever sold. Since then News Corp have invested over £1bn in online businesses, and their strategy is clear, go online or risk losing most of the classified advertising revenue that is spent with print titles.

Johnston Press are the largest UK media group with a similar strategy, based on developing closer relationships with advertisers by bundling the sales of print and online advertising together. Johnston have web versions of all of their main titles and believe advertisers value buying both online and offline advertising from a single authoritative source. Whether this is correct is uncertain, although advertising revenues across the group have fallen by 9.4% in the last year.

Recent figures show that classified advertising revenue is heading exactly where News Corp predicted (online), making EPE’s £235m contrarian strategy look like a very risky punt indeed (sales of the TES have fallen by about 12% over the last four years).

TSL have also announced they are raising the price of classified advertising by 10%. Employment advertising makes up the bulk of the TES’s advertising revenue and whether schools will wear this rise after a 6% increase in January is less than certain. Hiking rates by 16% may drive many schools to place their advertising online, and if this happens the 28 editorial redundancies already announced may be just the beginning.

EPE have also recently purchased Group GTI who produce recruitment publications, websites and events. While GTI has a strong European focus (UK, Ireland, Germany and France) it also has operations in Singapore and Malaysia. In one announcement about the deal EPE said, ‘The graduate recruitment sector will continue to grow as employers compete for the best graduates. GTI has been the market leader in targeted careers information and we believe this sector will show considerable growth’. Whether there will be any formal links between GTI and TSL Education is unclear, but it seems far from coincidental that two of EPE’s investments are both related to education and recruitment advertising.

EPE and the management at TSL Education face a difficult task in getting the balance right; get rid of too many journalists, become too like a tabloid and they risk alienating readers, advertisers and staff – and more importantly the funders who back EPE. There is a lot riding on EPE getting this right; if their plans work then EPE stand to make a packet when they on sell TSL Education, but if they get it wrong, by alienating staff, advertisers and investors, then we could see an ignominious end to a masthead that should be celebrating its centenary in 2010.

                   www.exponentpe.com

                   www.groupgti.com

                   www.johnstonpress.co.uk

                   www.tsleducation.com