Musn't Grumble

It has been a busy week for the public companies. Centaur Media saw its' share price fall to a new low of 17p and the directors actively buying shares presumably to make it tougher for unwelcome predators to scoop up the company. UBM produced results which prove that having just 10% of the business in print is good thing which could only be bettered by having less than 10% of the business in print. Most interestingly United Business Media claimed that rebooks on next years shows are up 5%. That is not only surprising, but also encouraging. Of course a rebook is not necessarily the same thing as contract to attend, but with so little good news around this certainly put a smile on my face.

Since we last spoke Reed Elsevier posted its results too and with most of its business in online subscriptions they were good. Also announced was a £120m reorganisation of RBI. This has to mean job cuts, but as far as I am aware no news yet of a 90 day consultation in the UK (a legal requirement if 100 job cuts are proposed).

Wilmington also produced respectable results and claimed they were looking for acquisition targets.

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• Reed Business Information to cut 35 UK staff (guardian.co.uk)
• RBI staff vote against further industrial action (blogs.journalism.co.uk)

Precision Marketing More important than ever. So we closed the magazine.

Press Gazette reports that Precision Marketing is to be closed with the loss of three jobs. ABC says its circ was around 7000, the announcement from Centaur says the circ was 12000. The editor of Marketing Week says this all refelcts the growng importance of direct marketing in the mainstream marketing mix. Marketing Week will be writing more about the subject which is not so important a part of the marketing mix that it will save the jobs of the three specialist journos who wrote about it.

Cutting through the spin the truth is the title was losing money and it has closed. No amount of corporollocks can hide that. Wouldn't it be more honest to say so (and that they had a strategy for killing off unprofitable small titles and doing something else instead perhaps by launching a highly specialist community site for direct marketeers)

Oh. Maybe this isn't a strategy and just a part of a long series of magazine euthanasias.

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• Marketing Week editor steps down (guardian.co.uk)

More Closures Mergers and Sales in B2B

Apologies for the light posting. It has been a troublesome start to the New Year. A computer title, Computer Buyer, the lame sister title of Computer Shopper closed by Denis pubishing, Centaur closing and merging a couple of magazines are just two of the bad news stories that have already oozed out of the sector in the last couple of weeks.

Meanwhile Nexus Business Media has sold the last of its magazines to aggregator of old mags, Metropolis. Nexus has expunged its entire print portfolio in the last three years leaving it as a small but online and events only business. CEO, Neil Thackray has stepped down.

No news yet of the inevitable at RBI. Surely they haven't bottled it?

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Damn it. We were right.

Could we have a day off from the bad news? EMAP inform, the bit that does Local Government Chronicle and Drapers has announced 40 redundancies.

Meanwhile Centaur reports its revenues have slumped and its share price slumps in harmony to an all time low of 46p - less than half its float price five years ago.

Everybody is now rushing around like headless chickens trying to make it right. But why, we are entitled to ask as shareholders and employees, has it taken so long to wake up and smell the coffee. I have been accused by some correspondents and readers of this blog of being a pessimist. Actually I am not. It just makes me mad as hell that we have left this all so late. We loyal readers of BMB, have seen it coming for two years. But it is not too late. Radical and innovative steps will still pay off. But please don't do the obvious. There was a story yesterday (forgive me I have lost the link) saying that Conde Naste were cutting digital costs to defend print. Duh!

If anybody in B2B thinks thats a good idea send out for the club revolver and do the honourable thing.

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Sharman Tanked

Just a few days ago we were speculating on Centaurs results and the inevitable cost cutting that will follow. Poor Howard Sharman, the Centaur Business Development Director, took a sabbatical to get a M.Sc, came back to work and found his desk had been sold and nobody could remember what he did. Actually that's not quite true. His position has been made redundant.

Interestingly the Centaur announcement blames the redundancy firmly and squarely on the credit crunch by saying

"the recent slowdown in acquisition activity, following the impact of the ongoing credit restrictions means that a significant portion of his prospective duties has been curtailed."

This is interesting on two counts. The credit crunch excuse has not been used quite so overtly before and not entirely convincingly in this case. As far as I know Centaur has made few acquisitions anyway, and has never done so with borrowed money. This is cost cutting to mitigate revenue decline make no mistake.

Oh and if you are in the publishing business please don't use phrases such as "ongoing credit restrictions" - Yuk.

Centaur Starts to Feel the Pinch

Cenatur media announced its yearly results today. Revenues flat year on year and a small improvement in margin resulting from cost savings. Also made clear is that the second half has been ugly, with an 8% drop in print revenues.

I can't see how there won't be a material fall in profits this year. As the employment market loosens up recruitment revenues will crash. Print advertising in the financial sector is hardly going to be a growth sector. The share price languishes at less then 60p, valuing the business at around £80m or just four times adjusted earnings. The future drop in profits is already factored into the share price, but shareholders have a long wait for recovery and in the current debt market thinning hopes of a private equity saviour.

Expect swathes of cost cutting as the business tries to catch up with the downward revenue trend.

Wilmington Signals No Deal.

The Times is reporting that the long rumoured acquisition of Wilmington by HG Capital won't happen. Apparently it did not porve possible to put the deal finance in place. Ouch! Apart from the immediate downward impact on Wilmington shares, what does this say for othe quoted companies and the RBI deal? ITE, Centaur and SPG would all be happier in the private world, but if Wilmington can't get done, it is hard to see how any of them can escape from dull valuations of their businesses or the lack of liquidity in their stocks. Shareholders may have to be very patient indeed and hope that the businesses survive the curent economic malaise.

UBM Thinks it Publishes The Engineer

According to the UBM corporate website, it is the proud publisher of The Engineer.
In the age of up to the minute news, and UBM being a net savvy sort of organisation, you might have thought they would have noticed they sold The Engineer around ten years ago to Centaur. Or maybe UBM has bought Centaur and forgotten to tell anyone. Do you think there is a whole bank of empty desks somewhere in Ludgate House and everybody just thinks those guys on The Engineer are out a lot?

Anyway, here is the quote.

"UBM businesses still publish many other titles that were launched in the 19th century, including Building magazine, launched in 1843 by Joseph Hansom, as well as The Engineer and Chemist & Druggist."

Wilmington Could get Sold to HG Capital

The Telegraph reports that Wilmington is poised to receive bid interest from private equity firm HG Capital. Other mid market players, such as Centaur, could generate interest too says the Telegraph.



Like all media stocks, Wilmingtons share price has suffered of late, despite turning in profit growth. Wilmington has also reduced its dependency on magazine advertising by selling off mags. There is still much to do though to turn Wilmington into a powerhouse media company. I have no doubt that CEO Charles Brady looks enviously at the privacy enjoyed by APAX owned, Incisive Media as it wrestles with the new paradigm.



This kind of public to private transaction will likely only happen with the support of management. If Brady and his Board want this to happen and a believable plan can be constructed then it will. If Brady is hostile to HGC it won't.



Interestingly Centaur is more of a bargain than Wilmington. About the same size as each other Wilmington trades on a p/e of 16; Centaur trades on half that. Put another way the market value of Wilmington is considered to be 8 times its 2007 profit. Centaur is today valued at just 4 times last years profits. This reflects the work that Centaur has yet to do, and Wilimington has already started, to move the business from magazine dependency to professional information solutions.



Heres a thought. Buy Wilmington and then buy Centaur, strip out all the duplicate costs (perhaps £10m) and replicate the events/training expertise of Wilmington in the Centaur business. Both businesses have useful positions in the legal sector too.



Assuming you share the benefits of the cost saving between the two valuations the implied value of Centaur, based on todays share price is just 2.6 times post merger profits.



So pay a 30% premium on todays price for Wilmington and twice todays price for Centaur and what do you have? A combined business with a turnover of £170m, profit of £47m acquired for a blended price of 7 times earnings.



I am not sayng these are the right prices to bid, but it does illustrate that something is do-able if all the parties are willing.



Oh and one more unconnected thing - a little bird tells me that a big announcement is about to go down tomorrow - Tuesday - at a major b2b media house. My bet is on a swathe of redundancies at.......

Never Mind the Strategy Lets Reorganise the Management Team

Well, it no longer matters whether Gary Hughes, the CEO of CMPi has or hasn't understood what to do next as we were postulating a couple of weeks ago. He has been fired. Well, made redundant. CEO of UBM, David Levin has split the CMPi business into four chunks, just as he did with the CMP business in the USA, with the heads of each reporting to him directly. So thats four direct reports from the US, five from the UK (I'll come back to why its five) plus his head office reports which must at least include his CFO plus the Asia business. When I went to school we were told that you should never have more than six direct reports. I reckon Levin must have north of ten direct reports. That's a tough and some would say disfunctional structure.

But does this make any real sense? Go back a hundred years and Morgan Grampian/Miller Freeman, the precursor to CMPi, used to believe in "market focus". In his recent interview with Press Gazette, Hughes said,

"We like markets rather than media formats. We like to be in markets and then work out how to make money in that market rather than say here are magazines and websites, [now] make money even though you have no face-to-face assets.” A bit of a bugger than he hadn't understood the implications of his boss's change to the structure of the US business.

Serve the market. Customer first, product second is the mantra of the market focus advocate. There is a bit of this left with all the Built Environment assets grouped together under Jonathan Newby. Then there is a conference division, which is mostly events and some publishing; the Live Media Division, which is mostly events, and then there is the rest of the publishing stuff which includes Music Week and Daltons Weekly run by the CMPi CFO. No mention is made of Publican or TTG, which seems odd.

So what if Music Week wants to run a conference, where would that fit? What if an exhibiton idea evolves from a conference? Where is the focus on digital and who will make that happen? Remember my turkey analogy?

There has also been speculation that UBM, flushed away from the proposed merger with Informa, is a candidate to buy ITE and/or Centaur. Now that is interesting in that ITE is an events business with most of its activity in Eastern Europe, so it fits. Centaur has seen its market value collapse despite growing profits. It is now worth less than 5 times its EBITDA. No doubt Centaur execs think this is unfair, but there has been little revenue growth of late, they are very exposed to the advertising cycle and if they have a strategy it is hard to discern.

An irony in the history would be that Graham Sherren, founder of Centaur, was the MD of Morgan Grampian, which became Miller Freeman, which became CMPi. In fact so was his Dad. Also Centaur owns The Engineer which was sold to Centaur by CMPi (then Miller Freeman) some ten years ago.

It's nothing for money

Apologies for lack of posts. But hey, I don't know about you, but I'm really busy. The Times reports this morning on impact that the difficulties debt providers are experiencing in spreading the loans seciured to do the Emap deal, will have on future media deals.

The two in play are RBI and Informa. In the smaller media sector there is much speculation also about the future of Centaur.

If funders get nervous that doesn't necessarily mean that media deals won't get done - but it will mean further pressure on the level of leverage in private equity deals and that in the end means a lower price.

Centaur Fires Hacks to Boost Online Edit Strategy

Centaur has decided to use its magazine teams to drive content on its MAD website, making the digital only reporter jobs redundant in the process. This news tells us something about Centtaur and raises a thorny question about online journalism.

For Centaur this is partly about cost cutting. Their business is potentially vulnerable to a downturn, being exposed to the media and marketing sector (one of the first to suffer in a recession) and the finance sector. To compound the worries of the Centaur team, underlying revenue growth (ie stripping out acquisitions) has been extremely modest indeed over the past four years.

There are rumours about that Centaur may look for a way to get off the public market and cost cutting is a normal preparation for maximising value. It all depends of course on what founder Sherren wants to do. He may back an MBO but that depends on how enthusiastic he is about CEO Geoff Wilmott. An MBI with the coessence of the founder is equally likely.

In any event with little prospect of meaningful revenue growth in the months to come, expect further cost reduction announcements dressed up as strategy.

And what of the editorial issue? What most publishers fail to grasp is that online writing is not the same as off line writing. Journalists whose first loyalty is to their printed magazine will often avoid scooping themselves - holding back on stories that they could break online until the mag deadline. Few print journalists pay enough attention to deep linking to third party source material and background. Nor do they properly tag stories so they can be relevantly retrieved on future occasions. It is also usual for the audience footprint of the web site to be different from the magazine. Often the website will have an international audience. It will come from several parts of the industry value chain too. That should mean it should have its own editorial characterisation, style and content map - but left in the hands of the print guys, it will be ersatz the mag stuff put online.

If b2b publishers are ever going to crack the online world they will have to take it seriously - as seriously as they would have taken a weekly magazine launch in the last century. That means proper research, detailed content, design and taxonomy planning, focussed resources and a clear vision of what the product is, what it does, how it says its, who it says it for and why it should matter to its audience. If they don't magazines will continue to die and the web sites won't be up to much, will lose money and eventually lose share of mind to alternative solutions.

It's over for Business Magazines

Press Gazette conducts an analysis of UBMs results here. Print advertising is now in terminal decline, down 10% this year. This blog has been warning of the death of print for nearly two years and suddenly the combination of a shift in advertiser behaviour, the impact of several years of cost cutting on editorial quality, the impact of the Internet and the economic squeeze has tipped magazine publishers into near meltdown.

Lets summarise where we have got to. EMAP, one of the biggest and most successful business media companies has been sold off and has yet to emerge with a transparent strategy. Reed Elsevier, the sleeping giant of business media, has announced the sell off of all its business magazines. UBM, containing the remnants of the once great Miller Freeman and the darling of the eighties in business media, Morgan Grampian, is focussed on "data" and "events", Centaur trades on a share price 20% below is float value four years ago, has fired (made redundant) many of its most senior managers and has not demonstrated underlying revenue growth for at least three years., Nexus - once the fastest growing business media company in the UK has sold all but a handful of its magazines to concentrate on digital development.

Watch out for more magazine closures, falling enterprise values of magazine dependent companies, swathes of redundancies amongst magazine sales staff and journalists. The era of the business magazine began 150 years ago. Its all but over.

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

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.

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.