Tuesday, February 26, 2008

Join an FT Forum for £1700

The Financial Times is getting on the professional networking bandwagon, launching a service at £1700 a go to belong to a secure forum. Mmm. There is no doubt that general business networks have been popular but also have some disfunctionality. Linkedin is probably the most famous of these and, clever as it is, for users its an unwieldy beast. Two layers down and I find my network is now over a million people. Thats not a network - its a population.

Also lots of business folk are connecting to like minded folk on social networking sites like facebook.

So we could conclude that specialist business networks could be a cool thing. I doubt that many will want to pay £1700 for the privelege though.

All the evidence from forums on websites is that they are populated by a small number of enthusiastic posters and trolls. Good networks also take a lot of maintenance. Its like hosting a party. The owner of the network will need to work hard to keep people interested and in this case, deliver £1700 of value. We see professional networks as being a fantastic opportunity and many publishers will be watching this intiative closely. Personally I'll eat my hat if there are enough people who will pay to make this a real business for Pearson.

Monday, February 25, 2008

Clarion Call for Reed Defence

On Friday (I missed it!), HG Capital realised its investment in Clarion Events for £120m - nearly three times the price they paid four years ago and around 2.5 times turnover ( although Clarion has bought some shows in the meantime so its hard to work out the return rate. The buyer is Veronis Suhler who according to this article on Thomson Merger News, will also buy the defence shows from Reed.

So, the delay was the result of waiting for a back to back.

Reed Elsevier Still Playing in Defence

I suspect we might be talking quite a lot about Reed in the coming months. The Guardian reports on the long drawn out sale process of the defence exhibitions. Reed put them on the block last year following a concerted campaign by some shareholders arguing that Reeds involvement in the defence industry was unethical - especially given its subtantial business in healthcare information.

Reed has intially expected to complete the sale of the defence assets before the end of 2007, but still no firm news.

The delay may be for a number of reasons. Reed insist that the completion of the deal is progressing so we can guess that either
a) Something has come up in due diligence that is compromising the offer price. If this is the case it is likely to be something to do with the exposure to security costs - especially for the London based DSEI event, or the legal complexity of the part ownership of the South American assets.
b) The buyer is a private equity firm that is trying to "back to back" the transaction with something else and the Reed deal has just got bogged down in someone elses transaction,

Whichever, or indeed whatever (if the answer to the delay is in neither of these hypotheses) Reed has little else it can do save sit tight. There won't be a long queue of potential buyers out there.

Hanley Wood thinks your Company is Rubbish

And there was me thinking that I was the only one who thought b2b media companies hadn't got the plot. The CEO of Hanley Wood, a US b2b player says that there are ten sins being committed by players in the sector. I don't have the details. but there is a short interview with him here published on bornot2b

Oh - and the ten sins?

"...underperformance, cowardice, technophobia, inferiority, complacency, coziness, stinginess, cluelessness, disorganization and dullness...."


Friday, February 22, 2008

Centaur loses Coates in Swift Redundancies

Press Gazette has put some more flesh on the Centaur story of management redundancies we reported last week.

The thee execs going are Robin Coates, Annie Swift and Roger Becket. Old hands and loyal to Centaur for many years. They will have made some money in the float of course but I have no doubt this will have come as a painful surprise. Underneath all the perfectly proper guff about wanting to have a single strategic view and wanting to improve the web offering (much needed), is the harsh truth that this probably saves a useful half a million a year, perhaps more - or an instant 3% profit improvement

Thursday, February 21, 2008

Reed - but not in print!

Many are suprised that Reed Elsevier has annnounced the disposal of Reed Business Information. As a reader of this blog you should not have been. We predicted last year that there would be a series of business media disposals as the full horror of the shift in user and advertiser behaviour begins to manifest in revenues and profits.

This is a big deal though. RBI was created from many small trade publishers aquired in the late sixties and seventies. Originally the almalgam was the trade arm of IPC and for many years, until the early eighties traded as IPC Business Press.

In recent years RBI has tried to reinvent itself. Its blue chip magazine brands are not the power titles they once were. Paid circulations have collapsed, recruitment advertsing as vanished online and now display advertisers are also beginning to migrate to the web. The RBI management invented Totaljobs, whose revenue grew 35% last year, and have made a good fist of building what they call "community" websites. Never the less 60% of the RBI revenues are ad based on this fits uncomfortably with the Reed Elsevier digitial subs model so Crispin Davies wants to excise the cycle. Of course the thing about business cycles is that they go up as well as down. Timing is everything. Reeds subs based enterprises are never likely to enjoy 35% growth! This reaffirms Reeds desire to be the most boring media company on the planet. Also expect many more years of pretty dull share price perfromance but solid and dependable dividends.

Curiously the Reed desire for strategic purity does not stretch to the disposal of Reed Exhibitions. Although there is no online revenue and the revenue is all from marketing budgets, Davies has judged that the cash flow benefits of being the worlds largest trade show organiser are just too good to give up on.

For the folk at RBI an extended period of uncertainty looms. There will be no rush to do this deal. Indeed as Davies himself admits, the current credit shortage may make this £1b deal tough hurdle for private equity in particular. He will be patient. This is no fire sale.
What the employees can be certain of is that any new owner will be looking for cost savings. There is at least £10-15m of quick costs to come out based on my back of envelope calculations, and as print ads - 60% of RBI revenue, continue to decline the pain will go on for a long while.
We will come back to this in coming months, but for prospective buyers valuation will be tough. What are magazines "in long term slow decline" as the Reed statement puts it, really worth? How will a buyer view the generous employement contracts, the fantastic (if you work there) pension scheme, and the expensive (in rental terms) properties.

Is the value in RBI is break up? Totaljobs will have a very differerent valuation profile to Farmers Weekly.

Business media could not be at a more interesting juncture.

Wednesday, February 20, 2008

Credible and Independent Coverage of Journalism

I have been properly taken to task for a post from some time ago which reported on the near demise of Press Gazette. I said that it deserved to survive as it was the only credible independent review of journalism. I had of course forgotten about the credibly independent folk down at the seaside who produce journalism.co.uk.

My point was that without the likes of PG and journalism.co.uk we would be left with the partisan coverage of media in the national press. And who wants to get their media wisdom from Stephen Glover?

Happy to set the record straight.

Tuesday, February 19, 2008

Death of US magazine industry

This gloomy site records the death throes of the US magazine industry. Not to be read unless you are in a very optimistic mood.

2008 A Bad Year for Business Media?

Paul Conley is regular blogger on matters b2b. He argues that publishers don't yet realise how bad 2008 might be. His analysis offers a stark contrast to the blind optimism of the PPA research published last week.

Hidden in his fears of a downturn is the harsh reality that media companies in this space don't really know what they are doing. They hope that digital plays will turn out alright but they don't know how to make it work (there are a couple of interesting exceptions which I might come to in the future.)

Let's be clear - the future is not about putting magazines online. It never was. Not even in 1996. And yet most business publishers do little else. Business to business advertisers are still sceptical about the power of online marketing. What is the point, they ask, of getting clicks? What should be done with these clicks. Many blue chip consumer companies with a trade arm have a corporate website and a consumer web site, but no trade site. Few know how to buy online media, and not many business media reps know how to sell it.

Monday, February 18, 2008

United Business Media and the Honda Strategy

UBM are a bit like Honda. When Honda wanted to crack the Indian market they decided to break in not with their latest products but with an old version of their 50cc motorcycle. If the economy is new, give them them old products until it is sophisticated enough and wealthy enough to afford the new.

David Levin, the UBM CEO is using his PR Newswire brand and his events business model to break into both China and India. He may be doing some online too, but the clear thrust of his interview with Livemint is that the old model is the main core of activity. Levin is known for being clever and he went to business school, so he will have read the Honda case study. Hard to fault the approach I suppose.

Thinking though that the future of business media might be something to do with digital I was struck by this quote;

"We build professional communities through 258 (trade) shows, 225 trade magazines and 300-400 websites catering to different niches." It just seemed a bit strange for the CEO to know to the precise unit the number of trade shows and magazines that he owns, but to only be able to guess the number of websites with a 33% uncertainty. If digital was at the heart of UBM strategy as you might sometimes think if you read all the hyperbole about Searchmedica, you'd think he'd know wouldn't you?

Reed Elsevier to Cut 1000 Jobs says Telegraph

It is part of the general rhythm of things that large companies like to prepare for a downturn by cutting costs. Reed Elsevier are to announce as many as a thousand job cuts saving £100m over two years according to the Telegraph.

This is around 3% of the work force worldwide. Although is always wise to keep costs tightly managed some may see this as one of the worlds biggest media players preparing for some rough water ahead for the business to business sector

Friday, February 15, 2008

EMAP may not be dead - yet.

It is being reported that the credit crunch has scuppered, at least temporarily the Apax backed merger of Emap Business and Incisive Media. To merge the two businesses would require refinancing debt already on Incisives balance sheet - and the credit crunch means that would be on less favourable terms than the deal currently in place. Also, the new deal would require more equity and less debt than previously thought as the banks play very cautiously in the new "sub prime" world.

In practical terms this means that Incisive and Emap will operate seperately - at least for the forseeable future. Of course the deal to acquire Emap is not closed and Apax still have to place all that debt requirement. I have no doubt they will be confident - but what happens if they can't?

Centaur Makes Potter Media and Digital God

Centaur Media has announced what they call a divisional re-organisation, putting their publishing MD of 21 years Centaur service, Tim Potter, (the man responsible for the failed launch of Finance Week which closed rather quickly)in charge of an integrated media and marketing division and firing three senior publishers. This looks like a half hearted digital strategy brought on by weakness in growth in the marketing and media sector, failure to capture online revenues in the sector and a hedge in case it all goes wrong of a saving of perhaps £300k to £500k.

More interesting and compelling would be a clear decription of what Centaurs digital strategy actually is.

Thursday, February 14, 2008

PPA research proves all is well in business media land (Sic)

I still haven't seen the PG article but I guess its referring to the PPA sponsored research reported here which claims that the UK business media sector is worth £23b in 2006. The research claims that this is an increase from £15.6b two years earlier - ergo all is well and booming.

Now call me an old cynic but I am not so sure about this. In 2006 the total turnover of the listed business media companies in the UK was £13.3b. I don't have the numbers for 2004, but lets imagine that the rate of growth as in 2004-2006, (as reported in the PPA survey), continues in 2007 and on into 2008. Business media is booming as they say at the PPA.
Based on this assumption what would you think the forecast for 2008 revenue for UK listed business media companies is? If we believe the PPA research and my hypothesis it should be around £20b. What do you think it actually is? I went and looked up the analysts forecasts and the 2008 forecast is - wait for it - £14.4b. Still a healthy annual rate of growth of 4% but rather less bullish than this survey would have you believe.

Why should this "discrepancy" exist? Three theories. First - the survey is sponsored by the media most likely to benefit from saying that all is well in the world and it is therfore optimistic. Second - the methodology of the survey is completly flawed - Third - the survey is broadly accurate but the spend is not going to the traditional business media companies but to somewhere else. Where is the somewhere else? Digital marketing services? Google ads?

Who knows for sure but what we can know is that this research is as illuminating as a spent match in the slough of despond. Or even Slough. We need to do better than this to understand what is really going on in business media. Self serving, unbelievable research will make no difference to business media customers and lulls media owners into a false sense of security.

Boom in Business Media and Earth is Flat.

Apparently the Press Gazette is leading this week with headline "Boom-time for business media." I'll read the feature with interest but I fear the fine folk at PG may have swallowed what Nick Davies as called some "Flat Earth News". If this is a boom time for business media why did Huveaux have to abandon its sale process last year; why is RBI closing its healthcare magazines and laying off a further 16 people and warning of an uncertain year ahead? Why is Centaur share price trading at 25% below its float price of four years ago? There are some real opportunities in business media, but a boom time this isn't. The sub prime mortage market is worth a lot more than £23bn and that's not booming either.

Ocean Media Sold for over £100m

I thought Ocean might have a tough time following its MBO from Trinity Mirror last year. But just a couple of months ago it was sold in secondary deal to AAC Capital (Formerly ABN Amro) for nearly three times the price Trinity sold it for.

The management team have made a lot of money. How did they do it? We said at the time of the MBO that organic growth was going to be hard to come by. Some have said that almost all the growth came from a recovery in recruitment advertising on Inside Housing - almost all of which converts to profit.

Could it be that the management team produced a pessimistic forecast for Trinity Mirror to keep the price low? Surely not. It is much more likely that they just got lucky don't you think?

New manager of the business (former MD Dave Moran presumably spending his time throwing fivers in the air and shouting Bwahahahahaha.) is ex Builder Group and CMP exec Trevor Barrett.


I know this happened a while ago, but it can hardly pass without comment. It does seem extraordinary that the management of a business with the money and resources of EMAP and its extraordinary brands can think of nothing better as a strategy than flogging it all off.

Still, a good price was achieved for shareholders I suppose. It does appear though that APAX have been good as their word in backing their buy and build strategy around Incisive Media. On the assumption that EMAP Business becomes an integrated part of the Incisive operation, Wellers empire is now one of the biggest B2B groups in the world. This will be a substantial test of Wellers management. He has no experience of runnning an enterprise of this size and will need a strong second tier management team.

And on a final note, just because its big doesn't mean there is any point to it. I would love to hear a clear strategy description for the new enlarged business - but now Incisive is a private business I suspect we won't.

Wednesday, February 13, 2008

Its Been a while for The Business

Its been a while since I posted, but I may return to this as the world of business media is panning out interestingly. As this blog pointed out last year, the relaunch of The Business was doomed to failure. We predicted that full price newstand sales would only reach a tenth of the prelaunch hype of 50000. We were not wrong. Total newstand sales after more than a year only reached just over 7000 reports Press Gazette and annual losses of millions. The title is closing.