Over in the US more trouble for the folks at Penton Media. Paul Conley reprints a letter to staff from their CEO which is very long indeed. It takes six lengthy paragraphs to pluck up the courage to tell staff that the business in moving to a four day week for the Summer. When I want to "How to tell people bad news" school (I really did go on a course about this once!) we were told that you should put the news right at the top of the communication. No amount of flannel can hide the horror of bad news whether its diagnosis of a terminal illness, redundancy or anything else.
One quote from this missive sang out to me,
"but remember that one of our Achilles heels is that we are mostly supported by advertising which has collapsed. Speaking of advertising, it has not only collapsed in print, but as a company, we haven’t shown the growth we should on the web." The problem is that almost every media company can make the same statement, business media, radio, regional papers, most national newspapers, most conusmer magazines.
If I were runnning Penton, I might not worry about saving a few quid on the salary bill, but perhaps use a day a week over the summer to get everybody working on a better plan for the future.
Reed Elsevier held its AGM last week. In summary, the management bragged that 80% of their profits came from the professional information business which, whilst not immune to the downturn is nevertheless pretty robust.
By contrast the marketing driven businesses, RBI and Reed Exhibitions are having a very rough time indeed. These are direct quotes from the Interim Management Statement;
Reed Exhibitions: Budget pressures on promotional expenditure are leading to reduced exhibition space sales and a decline in paying delegates at certain shows. Attendances are showing encouraging resilience. The revenue pressures, together with the net cycling out of biennial shows this year, will result in revenue decline and lower adjusted operated margin against an exceptional year in 2008. Of most significance to date are the reductions in size of events in the property and retail sectors. The cycling out of biennial shows will particularly affect first half comparisons. Reed Business Information: Advertising markets are being significantly impacted by the global economic downturn across geographies and sectors. Subscriptions and other user revenues, which now account for over 50% of the business, remain relatively robust. In this difficult environment, the focus in RBI is on right sizing the cost base to match reduced revenue expectations. Adjusted operating margins will be lower, as the impact of the revenue decline can be mitigated only in part by the significant cost savings from restructuring and other cost actions.
The last sentence is interesting isn't it? Trading is so bad that not even the cost cuts can offset the decline. What if it turns out to be true, that this year is not the nadir of the downturn for business media, but the best year we are going to see fro some time to come. B2B blogger, Neil Thackray has argued that a new model is required if the industry is to escape from its current malaise. It looks like Reed Elsevier may be looking at hard financial evidence that he is right.
New Reed CEO Ian Smith will already be forming a view about what to do. The failed sale process means that even though the RBI business is small it will be an obvious boil on an otherwise alabaster skinned face. Until it is lanced it will ooze pus at every presentation to analysts.
Zombie Publishing as Lightening Strikes Press Gazette
Zombie publishing is alive and well. Press Gazette has raised itself from its grave and now stalks the media world again. Five years ago Quantum Business Media sold PG to messrs Morgan and Freud for a rumoured sub £1m sum, who within a short space of time found that the press would not support the awards in their ownership and the title could not afford the costs of Morgans publishing model.
The company fell into administration and the closure of PG was inevitable - until Wilmington, pressed by the enthusiasm of a former PG exec Tony Loynes, bought the title for a rumoured £100,000. Before long, Tony Loynes had gone, the title had gone weekly and staff cut to the bone. Wilmington could take it no longer and a nano second after trousering the profits from this years Press Awards announced the closure of the title. Then along comes the Frankenstein of publishing, Mike Danson. He is making a specialism of buying titles that others have struggled with and breathing some life into them. It is not clear how the Press Awards will work. Wilmington appear to be keeping some involvement. Danson may succeed where others have failed if he focusses on the digital delivery of a solution. Although the PG website is attracting reasonable traffic it has hitherto been a very Web 1.0 offering.
The magazine is a cueship. To turn the Zombie into a living breathing thing requires a complete focus on building a digital solution. Danson should not plan on making any meaningful profit from his dead tree.
The Independent reported at the weekend that both Incisive Media and Emap, the Apax owned debt laden companies, have improved their profits. As both companies are private, we cannot see the detailed results, but we must surely assume that this is driven by cost savings. Apax will invest a further £20m in Incisive to retain control if they go ahead with a proposed debt for equity swap with lender RBS.
Incisive Media has previously published its results as recommended by the Walker Report. It is late doing so this year. It would look cynical for them not to honour that commitment just because times are tough.
We have had a while to digest the news of the demise of Press Gazette. The blogs have been full of epitaphs for the 43 year old title almost all regretting the demise.
Press Gazette is not a special case, merely an extreme manifestation of the malaise affecting the whole business media industry. The display advertising revenue is all but non existent. No one really believes that the readers of Press Gazette buy anything on the strength of an ad. Let's look at the history; The job advertising evaporates, condensing on numerous job boards, some of which are owned by the very companies PG is supposed to serve. With no jobs, the motivation to buy a copy or a subscription diminishes and circulation falls year after year. With no job ads the profits fall and journalists lose their jobs. The product gets weaker. No jobs and now less journalism. The circulation falls some more.
Avaliability and handling of the title is hurt as the retail news trade enforces range reviews which limit the number of stores where PG can be bought and successive publishers cut back on waste. Circulation keeps falling.
Display advertising shrinking to nothing, recruitment vanishes, paid copy sales diminishing. Costs chopped, journos fired. Prop up the profits with more events (PG ran the British Press Awards, the Student Journalism Awards. the Regional Press Awards, the Journalists Law Conference and more), eventually realise the mag is so unprofitable that the only way to cut more costs is to reduce frequency. This strategy works for a month or until the first management accounts are produced and everyone realises that some of the old rules still apply (In a growth market a monthly will be made more profitable by increasing it's frequency, but dropping frequency only makes things worse in a shrinking market.) Now there is nobody left to fire, no discretionary costs left to chop. Think for a while about an online only solution. Realise that there is still no revenue, and what is left from the mag will almost certainly shrink further without a print product. Further realise that so little has been done to invest in a decent CMS or understanding of how online media really works that the costs of building anything that looks credible are too high and will take too long to implement and be too expensive. Fire the remaining staff, close the magazine, announce an online solution, but even days after the announcement of the mag closure present no further information on your plans (because you don't really have any.) Quietly vanish.
It could be the story of any business mag. Be warned.
Meanwhile, who will now provide the service that PG once did. It's last editor, Dominic Ponsford has postulated that many of the stories he once pursued will not get written. As we would agree, he thinks his magazines demise is a "canary for the industry", Journalists trusted PG and would call with leads for stories. Jon Slattery and others have been debating whether there is some sort of argument for an online journalists hub. This is the reader community itself creating what they need. Ironically what they need is a publisher to sort it all out - one of the very people the readers blame for messing up PG.
Press Gazette has folded its print edition. Despite cutting costs and dropping from weekly to monthly it still makes no money. We should mourn this closure more than most. If the news industry can't support a news paper or magazine about itself then it is hard for the news industry to complain when readers won't support what we do when we write about them in other sectors.
PG will greatly missed. Shame on us all for letting it die.
Just to prove that rumours can't always be trusted - I am grateful to Lucy Huxley the highly regarde editor of TTG who commented on yesterdays post. She tells me that it is not true that TTG is planning to go online only although on of its offspring magazines has. Happy to clear that up.
Meanwhile, Penny Wilson, the departing Travel Weekly editor in chief also pings with the news that her departure is planned around her personal decision to go travelling with her partner and is nothing to do with the magh or the Reed travel business at all. Just as well I put a question mark after yesterdays headline!