May 7, 1999

BY RICHARD KAREL

Psychiatric Times, seen by many as a competitor to APA's Psychiatric News, was sold this March to San Francisco-based publisher Miller Freeman Inc. as part of an $111 million purchase of its parent company, CME Inc.

The transaction has the potential to impact APA's publishing operations, but APA and CME Inc. have in recent years been able to collaborate in some areas, according to Carol Nadelson, M.D., president, chief executive officer, and editor-in-chief of American Psychiatric Press Inc. Nadelson also serves on the editorial board of Psychiatric Times.

The CME Inc. sale "represents a challenge, because it can increase competition depending on their direction," Nadelson commented. "If they started a publishing operation, it certainly would be competition. If we could develop a collaborative model, it could be great for the field."

Competition is good, said Nadelson. "It makes you stand on your toes and think creatively and perhaps come up with more innovative and creative solutions."

She is optimistic that the transaction may prove mutually beneficial to both APA and CME Inc. "I expect that they probably will welcome a collaboration in many areas, and I would certainly hope that [the collaboration we already have] would continue," said Nadelson.

CME Inc. and APPI have an arrangement whereby APPI's Health Source bookstore is the bookstore for CME Inc.'s annual Psychiatric and Mental Health Congress, and is given a booth there. Nadelson expressed satisfaction with that arrangement, noting that it has proved profitable for APPI and provided a service to CME Inc. APPI authors are prominently featured at the CME Inc. meetings, which promotes sales.

"The mutual benefit is they get to know who the best authors are when they're having a meeting, and we get to sell our books." In addition, Psychiatric Times does psychiatric book reviews.

CME Inc. is owned by 53-year-old psychiatrist and entrepreneur John Schwartz, M.D. He is both editor in chief of Psychiatric Times and the chief executive officer of CME Inc. In an interview with Psychiatric News, Schwartz said he would continue in both roles. He expressed optimism that the additional financial resources available through Miller Freeman will permit the newspaper and the continuing education components to grow.

When he launched Psychiatric Times in 1985, said Schwartz, he recognized primary care was important. Over a period of several years following Psychiatric Times's inception, he began to market some of the CME meetings to primary care physicians. By mid-1997 he had a customer database of about 20,000 primary care physicians and about 35,000 of America's 42,000 psychiatrists. By comparison, Psychiatric News goes to about 40,000 psychiatrists.

The challenge was "how could we grow the primary care part of our business," he recalled. In 1997 he began looking at all the companies providing continuing education for primary care physicians and finally sought out Continuing Medical Education Associates (CMEA). That company was "doing for primary care doctors what we were doing for psychiatrists," said Schwartz. In February 1998 he bought CMAE for "between $5 million and $10 million." In mid-1998, Schwartz attempted to borrow $30 million to acquire a company that would allow him to tap into continuing education markets for areas including neurology, pulmonary medicine, and women's health, but could not get a lender. He began looking around for a partner. Brokerage firm Merrill Lynch convinced him it could "find a partner with very deep pockets" said Schwartz. Sixty companies expressed interest in buying CME Inc., and "we actually had 27 firm bids," which he characterized as "amazing." He settled on Miller Freeman Inc.'s offer.

Schwartz has known Marshall Freeman for 20 years and had seen that when Freeman sold Miller Freeman Inc. to United News and Media, the latter company took a hands-off approach to its new subsidiary, agreeing that Freeman would remain in charge of his company. This was the model under which Schwartz wanted to work, and this made his decision easy, said Schwartz.

He noted that he was a multimillionaire prior to the transaction, and that having $111 million more would not impact his lifestyle. When some people kidded him about whether he was going to get a Learjet or a Gulfstream after the deal, he told them that his next step was that he was "going to go to work" just as he had done before. "I hope I'm going to be doing this for the next 20 or 30 years," he commented.

CME Inc. and Psychiatric Times have come a long way since 1985 and $75,000 in profits, Schwartz said. This year he projects that the enterprise will make in excess of $35 million in profits.

"Psychiatry is a great field, and most psychiatrists are really fine people," said Schwartz. "I hope we have made some small contribution to the well-being of psychiatrists and their patients, because that is what we started out to do and still intend to do."

CME Inc. is the largest for-profit provider of continuing medical education in the United States, according to a statement posted on the Miller Freeman Inc. Web site. The continuing medical education sector in the U.S. is worth approximately $3 billion yearly and has "consistently experienced double-digit growth rates due to doctors' increasing need to keep up with the heightened pace of pharmaceutical drug launches and uses," according to the statement. The growth of Internet-based information services is also driving physicians' demand for more continuing education.

In addition to Psychiatric Times, CME Inc. publishes Medicine and Behavior, maintains two interactive Web sites, and runs the U.S. Psychiatric and Mental Health Congress.

Miller Freeman Inc., with divisions in the U.S., Asia, and Europe, is "the world's largest trade-show producer and a leading publisher of technical and industry-specific magazines," according to the company's Web site. The firm stages more than 370 exhibitions and conferences yearly and produces nearly 400 publications including 270 magazines and various digital media services.