Business Media Blog

Dods share price too conservative?

2010-07-14T19:07:00.000+01:00

News today that Mike Danson, who sold \Datamonitor a few years ago or more than £200m, has now sold his stake in Dods (formerly Huveaux), to the Deputy Chairman of the Conservative party, Michael Ashcroft. Just last week the company acknowledged that it had been approached by several parties about a possible takeover. The assumption was that Wilmington was the lead bidder.

If a deal gets done then the rumoured offer price was around 15p. Last week the shares were at 11p. With Danson having sold his 23% stake for 13.5p to Ashcroft the share price has drifted up to 13p - awful close to the likely bid price. So what is Achcroft up to? Hard to believe he is in for the quick buck of a 2p gain. Either he will pressure the Board to hold out for more, or maybe he has plans of his own. Hard to see how his political affiliations woudln't compromise the perceived editorial independence of the Dods brand though. If I were him I wouldn't be expecting an invitation to join the Board anytime soon.

Architect of EMAP and Incisive deals pays the price

2010-06-14T17:14:00.001+01:00

The departure of Stephen Grabiner from APAX is hardly a surprise. Bright, able and very ambitious, notwithstanding when your job is to make money from media investments and you lose most of it the axe is bound to fall. Apax bought both Incisive Media and EMAP (the latter in partnership with GMG). Both businesses, although horribly damaged by the economy and an overdependence on print, remain profitable but neither have been able to climb the mountain of debt that was used to fund their purchase.

Emap is arguably stronger than Incisive. It has a much bigger events business, is the more profitable and although the value of shareholder equity has been largely written off, has not had to give control to the banks.

With Carolyn McCall leaving GMG to join Easyjet, Grabiner exiting APAX there is hardly anyone left who can remember what the rationale for these deals was. Emap was supposed to be geting a cash injection to fund acquisistions. With large losses at GMG and no Grabiner at APAX how likely is that to happen?

To grow out of the problem requires great bravery. Will we see Emap and Incisive reviewing their assets, closing some and selling others? Or will both businesses struggle manfully under the debt but never really get anywhere.

Centaur Pulss up its Briefs

2010-06-01T10:31:00.000+01:00

Centaur has announced ite largest aquistion in many years paying £1.9m for taxbriefs. This business was founded back in 1975 - so its hardly an overnight success but does appear to be a reasonable newslette business in a market that Centaur should aim to grow in. Its not a transforming deal as Centaur still has a mountain of problems in developing a long term strategy for its print titles which are old and tired.

The Whore and the Train Crash

2010-05-26T09:10:00.000+01:00

Tim Weller telling the tale of how Incisive Media got through its debt crisis.

Ads are up and frequency is down

2010-05-18T16:31:00.000+01:00

Although Centaur and others have been reporting a modest recovery in advertising, this is compared to the horros of last year. Rtraher in the same way that a itanic survivor might have broken to the surface after being sunk only to discover that he was no dying slowly of hypothermia. Meanwhile, as if to make the point, Incisive Media ahd dropped the frequency of Computing to fortnightly according to Press GAzette. Expect Reeds Computer Weekly to follow suit. Computing launched in 1970 and has been a weekly throughout that time. The publishers claim the new format will allow the title to be more analytical. It will also be much cheaper to produce. The ads are never coming back.

Business Media still constrained by legacy

2010-05-05T08:37:00.000+01:00

We know now what the future for many business magazines will be. Many observers are surprised that the big behemoths of business media have not been more active in disposing of a tail of assets. As the business media offering gets more complicated most media companies are hunkering down around the markets where they think they will be best able to succeed, judging that competing to win in multiple markets is more difficult the more markets targeted.

When the sale of RBI was aborted it wasn't long before most of the titles in RBI USA were slated for sale. More than a year later the process is almost complete with an annoucnement just a few weeks ago that 22 titles had not been sold and would be closed. Since then a number have been sold to management. What might we conclude from this? An article in Folio magazine postulated that there was never any real effort to sell to trade buyers. Why? Well Reed might have judged that they had milked all the profit they could from these titles, but because of the contingent liabilities - especially redundancy costs, that the samll consideration they were likely to get would be wiped out when the buyers realised this. Better to threaten to close the titles and let the management take them away for a song and take their expensive contracts with them.

In the UK the liability problem is worse. It is possible that the likely value of many of the mags, once the liability issue has been netted off, is negative. Expect to see Reed hanging on to titles unitl the profit runs out and then selling them off one by one if the management teams can be persuaded to take them.

Many other business media companies have a similar problem. Values for magazines are low, and falling. Profits are still declining and there is little sign of a meaningful growth in print advertising. As Elvis used to say, we are all in a trap.

We started this blog four years ago urging comapnies to be braver else the world would get worse and worse for them. In july of that year we said,Are business media companies moving fast enough to adapt to this new world? The answer is no, but there is still time - just.

Most were not, so it has. Moving quickly to ceate th business you want to end up with remains thechallenge. The slow death strategy is demoralising for the business and worsens the prospect for a successful long term outcome. I just scared myself by reading this blogs archive posts from june and July 2006. Horribly prescient.

Computer Weekly lays off more Journalists

2010-04-19T10:15:00.000+01:00

The defintion of insanity is continuing to do the same thing over and over again but expecting a different result. News today that RBI owned Computer Weekly is laying off more editorial staff. This is part of wider plan to have intergated teams working across platforms. Nothing wrong with that of course, but if you employ fewer and fewer journalists and do nothing to change the print model the only ting that is certain is that the print title will die a little more.

Has the B2B industry given up on print? Does the growth of online mean that there is no future at all for using a dead tree to distribute information? Isn't this just a publishing problem waiting to be solved? If B2B really thinks there is no future for print then wouldn't it be better to close the print titles now and pursue the digital model with full vigour?

Findlay Publications Creditor Complains to OFT

2010-03-10T10:58:00.000Z

Older readers might remember that Findlay Publications fell into administration last year and then come back to life. At the time Ed Tranter, a director, said that the only reason this had happened was to deal with the liabilities in the final salary pension scheme.

One of the consequences of this process (what is called a pre pack administration) is that creditors in the old company can get short changed. One former freelance Editor who claims he is owed £3500 by the old Findlay is incensed by what has happened. WHen he tried to chase his debt he was told that this was a matter for the administrators not Findlay Media. He argues that the directors, products, address, telephone number -even the receptionist who answers the phone are all identical to the now defunct Findlay Publishing. He alleges that the administration was triggered when the bank called in a personal guarantee from the Chairman. He suggests that the company was bought back by the directors for an amount equivalent to the guarantee plus the administrators fee, leaving nothing for the creditors.

Pre packs are controversial. USed wisely they can often be the only way to secure the future of a business and its employees. As the complainant points out however, an adminstrator is supposed to act in the interests of creditors even though he is appointed by the management.

This particular freelance editor was so incensed that he initially took the matter up with Kent Police. My guess is that nothing illegal has happened here but there is an interesting moral principle. The matter is being taking up with the OFT which is currently engaged in a review of the pre pack process.

My own personal view is that whatever insolvency law states, it cannot be morally right that the only people out of pocket in the process are the small creditors. It is also true, that from time to time pre packs are used cynically.

I am sure that in this case Findlay directors acted entirely properly and leaglly but creditors who have lost all their money, would no doubt want to be reassured that
1) The reasons for the administration were unavoidable and all other possible courses of action had been explored (a creditors voluntary agreement for example).
2) That when the directors realised there was a solvency problem that all their decisions were in the best interests of the creditors first and the shareholders second.
3) If the underlying problem was an unfundable pension deficit why wasn't the new company funded with sufficient working capital to make some payments to old company creditors.

Reed Elsevier Results and the dangling question over RBI

2010-02-19T16:26:00.000Z

The Reed Elsevier results presented for the first time by a slightly nervous looking CEO contain some clues not only for the future of Reed but also the future of business media in general. At RBI revenues were down 18% and profits down 34%. The revenue fall was too great to catch up the margin with cost cuts. The exhibition business, a "late cycle" business according to the CEO, revenues were down 21%and profits down 31%. There have been rumours that Reed might consider selling REC, but there is no evidence for that.

REC is decribed as " a good business, well managed. It's just cyclical". As Reed freely admits it has little clue as to when the cycle will be up.

The strategy for RBI is simple and painful. Run it for value. (I thought all businesses did this for all assets), realign the cost base to lower rvenues (so cost cutting still a work in progress), grow the data services business (I wish I had thought of that) and make more asset disposals.

Its hardly radical and its a backfoot strategy forced on the business by the failed sale process, the rocky economic climate and the collapse in print advertising.

Interstingly no questions from the floor of the briefing about RBI which means the City has written it off.

2010-02-10T13:15:00.000Z

DMGT reports that B2B revenues are down 20% year on year for the last quarter whilst Penton Media in the US has filed for bankruptcy protection. Its still snowing in every sense of the word.

RBI Sells Asian Assets

2010-02-02T14:04:00.000Z

The Geldof backed Tenalps, home of Kent TV and Teachers TV has acquired some magazine assets from RBI in Asia. This follows the disposal of assets in the USA and Australia. No news of the moneys involved but it won't make much of a difference to the Reed Elesevier balance sheet. What about the UK? What will the RE CEO say in March when Reed is next due to update the world on its strategy. It should be wholsesale change, or asset sales or both, but is more likely to be, holding on for the recovery - which would be a mistake wouldn't it?

PPA New Exec is all Print and all Consumer

2010-01-20T22:59:00.003Z

Oh dear. The PPA has announced its new CEO. A print man through and through apparently. At the same time the AOP starts to distance itself from the PPA. What use is this to business media companies. Why would UBM, who make a tiny proportion of their profit from magazine publishing be interested in continuing to fund the PPA? Why would RBI who are driven by the desire to grow its proportion of income earned online want to pay for this? Who in business media thinks the main purpose of its trade association should be to lead with propping up magazines. We wish the new CEO well, but with a consumer print editorial background he faces an uphill task to convince the business media world that this is good news.

Rory Brown who blogs regularly about the b2b space has already written about his concern. No doubt there will be a period of honeymoon but the demons that led to the demise of Jonathan Shepherd (runours of many members threatening to resign) will surely rear their head again. Lets look out for an early statement of intent from the new CEO and hope for the best

2010-01-11T11:30:00.003Z

GMG are reported to be prepared in principle to inject more money into EMAP. EMAP is at real risk of breaching its banking covenants so although GMG are signalling their intent to stump up cash is for acquisitions, more cash may be needed to prop up the balance sheet and avoid an expensive renogotiation of banking agreements (which GMG are reported to have rejected as an option.) Elswhere there have been rumours that GMG will sell recently acquired PAid Content to raise cash. SO GMG has yet to make clear what ots own future strategy looks like and that means it is unlikely there will be any quick decisions about the future funding of EMAP. Potentially that is serious as in todays market delay in strategy clarity brings the day of reckoning closer. So there is a big difference between an "in principle" offer of cash and any cash being available. What EMAP has yet to demonstrate is that it has a compelling plan to build value in its business. It has and continues to take costs out. It has flip flopped on paid content strategy and there is little evidence that its current pay wall strategy is radical enough or innovative enough to crack the problem.

GMG are committed to paying down debt before taking any profits and will have to take a very long view. They have yet to right off their equity stake in EMAP (as APAX has already done) but they will surely have to.

Emap could consider selling off assets and hunkering around construction where they have a good data business and there may well be interestingfuture acquisition opportunities, and fashion, where they own WGSN and a selection of trade shows. This would make a manageable platform around which to build. Be brave, be brave.

RBI Sells and Closes in the USA

2010-01-07T20:51:00.003Z

RBI has told its emlpoyees in the USA that it is selling many of its controlled circulation titles and closing others. There will be job losses. I hear there were no bidders for the entire bundle of US assets that were identified for sale and most of the titles now being sold are either loss making or near to. RBI is keeping its Construction data business and Variety (both run by ex RBI UK managers).

A bloody and painful time. So what of the UK business? Nothing yet heard from new Reed Elsevier CEO but I would expect more pain there too as the full bite of the downturn grinds further into revenues

EMAP Going Concern Concern

2009-12-16T10:36:00.002Z

Both The Times and PG have reported on the Emap debt mountain focussing on their posted accounts which question its future as a going concern. Message to all at Emap. Don't panic. Well not yet anyway. Auditors are required to ask the question about whether a business is a going concern and to identify the risks.

It is a statement of the obvious that if Emap breaks its bank covenants then technically the debt is either repayable or must be re agreed on new terms. As Emap cannot pay down its debt without injection of further equity funds it is bust if it breaks the covenants and if no new arrangement can be agreed. That's a lot of ifs. First, Emaps trading may stay within the limits set by the covenants in which case there is no problem. If the is a breach, and it isn't a meltdown, the banks are highly likely to offer new terms with an increased interest rate. This may be combined with an injection of new equity or even a debt for equity swap (as happened with Incisive which shared APAX as a shareholder and RBS as a lender). The banks wants its money back and Emap going bust won't get them that result.

If you have a mortgage and negative equity then you too are not a going concern unless you have other assets to bridge the gap.

My guess is that at some point in the next few months there will be a material covenant breach and new terms will be agreed. Although EMAP staffers need not fear the collapse of their company, the pressure on costs will be relentless.

Heseltine Replaced By Heseltine

2009-12-11T08:34:00.003Z

Lord Hesletine is standing down as Executive Chairman of the company he founded. He will be a tough act to follow. In an exhaustive executive search, carefully reviewing all the talent available in the world of media the Board of Haymarket, which is owned in its entirety by Heseltine has decided to appoint the retiring Chairmans son. He steps up from his position as Deputy Chairman. What a happy coincidence that the best candidate was already in the firm and the famiily. What are the odds on that?

What is really lucky is that Rupert is nobodies fool. Will he be able to do some of the things that have never been possible under his predecessor or will the shadow of Tarzan still loom large over the Board Room table.

DMGT Squeezes B2B

2009-11-26T09:32:00.001Z

DMGT has released its preliminary results. ALthought the headline talks about something called "b2b resilience" the truth is much flakier.

If we ignore currency movements underlying revenues are down 5%. Risk Management Solutions has had a "higher than usual level of cancellations". The property business has crashed but the management claim some signs of improvement in the UK. Euromoney, in which DMG has a stake, has had a tough year and expects the next quarter to be tough.

The exhibition business (late in late out) has experienced softer bookings in the second half and
"more recently, encouraging attendances and booking trends, but yet
to convert into revenues." And I have no idea what that means.

So it's still tough. A lot of costs have been taken out and, like many others, the management are praying a recovery will come and save them.

Centaur Down - but falling more slowly

2009-11-23T07:48:00.003Z

Centaur has described with some optimism current trading. The year on year revenu decline has slowed from 32% to 28%. The world is so awful that this is seen as good news these days. Expect the next results to show a year on growth, but the truth is Centaur will take years to get back to where it was, if ever. It will generate cash in the future, but whether there is any meangful growth in value to enjoy is highly questionable. Although some analysts argue that Centaur is undervalued (notably Numis the house broker) this observer thinks the recovery, such as it is, is already in the price.

Media Week Has Become Media Weak

2009-11-17T15:28:00.006Z

It wasn't long ago we were mourning the demise of Press Gazette only to see it jolted back to life by Mike Danson. Now Media Week is to close. There will be no saviour. Haymarket has always taken the view that if they can't make a title work then no one can.

Haymarket bought the title some five years ago and has struggled to make sense of it. Having loathed it as a competitor for some years, it never sat warmly alongside Campaign.

Media Week is dead, not because there are no media planners working in ad agencies (its principle audience) but rather because it has failed to find a new revenue model to replace sales job ads and media company flag waving.

Revolution is also closing in all but name, as it becomes an occasional supplement rather than a stand alone title - and Revolution is supposed to be about the sexy bit of media. It only proves that even in relatively good markets, business mags will continue to struggle.

This closure, and that of Contract Journal are just two examples of what will happen to you if you fail to come up with a new business model. Nobody seems to be listening. This blog and others have warned about all this for two or three years - but unless you change fast this is not the end, not even the beginning of the end. It may not even be the end of the beginning.

Contract Journal has Contract Cancelled

2009-11-12T16:21:00.002Z

RBI has announced the closure of Contract Journal. Once highly profitable with a bucket full of tenders ads and recruitment, this recession has finally killed it off. Of course the construction industry will recover, but CJ has failed to adapt to the digital world.

A story that could be applied to too many titles whose relevance has been culled. Even when the recovery comes, for too many it will be too late. As we have said many times before, if you are waiting for the recovery to save you - you are hoping in vain.

Oddly, Reed has a very successful construction data business in the US. A mystery why they haven't joined the dots.

Reed Elsevier not Smitten with Smith

2009-11-11T10:05:00.004Z

Ian Smith, the newly installed CEO of Reed Elsevier is leaving with immediate effect. Press Gazette reports that the board concluded he was the wrong man from the current economic circumstances. The unspoken implication is that having the one of the worlds great media businesses run by someone who knows how to build houses (he used to be CEO of Taylor Woodrow) may not be the smartest thing to do.

For the poor souls at RBI, where most of the US business is being sold, and some continental europe assets, a new period of uncertainty may begin. With the helm now in the hands of swedish exec from Elsevier, the tolerance for low margin ad based businesses is likely to be low. Elsevier culture has always been about paid content.

EMAP bets the shop on pay walls

2009-11-03T18:17:00.005Z

As Paid Content points out, Emap has flip flopped on strategy for some time. Now all content on their web sites is to drop behind a pay wall. Unless there is an investment in new high value content there is little or no chance that many web users will chose to pay for news they once got for free.

A strategy that says we can't make money out of ads, so the users must pay, misses the point. If Emap can sell news to drapers I'll eat my hat.

Just last week the Sunday Times reported that Emap has asked its bankers for some discretion on its covenants. Trading is tough with revenues continuing to fall and cost cuts propping up profits. Unless Emap management has the resources and the nouse to invest in marketing and new content this pay wall approach will fail. Some in Emap have doubts too I have heard.

10/10 for bravery. Judgement reserved on implementation.

Sly Weller in Identity Confusion

2009-10-27T09:55:00.003Z

Who said this,

“Stabilise. Revitalise. Grow”,

Here's a clue. It was said in 2003 by a leading media executive.

Now, next question. Who said this,

"Stabilise. Revitalise. Grow". It was said by a leading media executive in 2009.

Thats one mystery solved. Sly Bailey is Tim Weller in drag. Or possibly the other way around.

Government Launches Job Board for Teachers

2009-10-22T10:45:00.003+01:00

The Government has launched a web site for schools to use when recruiting. Local newspaper editors are already bleating about the damage this may do to their business. But the biggest benficiary of schools recruitment is TES whose business is almost wholly reliant on this revenue stream.

I am sure there is no conspiracy here, but Bernard Gray, the TES CEO is hardly the most popular man with the incumbent Government having written a scathing report on the state of defence procurement.

Emap was brutally damaged when healthcare recruitment was hijacked by the Government several years ago. The TES is about to experience the same horrors.

Sherren Steps Down

2009-10-22T09:36:00.002+01:00

Thanks to a reader for noting that Centaur has announced the retirement of Graham Sherren as Chairman of Centaur. He will stay on as a non executive for 12 months. Will this lead to a change in approach and strategy?

Centaur in Play as CIG bid

2009-10-20T18:01:00.003+01:00

CIG, the vehicle supposedly created to buy subs based b2b assets which has Peter Balzegette (of Big Brother fame) on its board, has made an offer for Centaur. No surprise that the board has rejected the approach. The share price rose some 15% today. If the offer gets to 60p the shareholders should snap at it - but the board won't want to do a deal as the management is likely to be a casualty in any deal methinks.

Weller - Never said what was reported

2009-09-24T10:20:00.003+01:00

In spirit of fairness, Tim Weller claims,
"Totally stiched up by STimes, I should know bettern I never said "I am pleased to be shot of Private Equity" I said very happy with new deal" on a Tweet yesterday.

Those who eat with the devil should use long spoons

Uriah Heep is New Incisive CEO

2009-09-23T14:33:00.004+01:00

In an extraordinary interview given to The Times, Incisive Media CEO Tim Weller claims he has found his recent debt for equity deal crisis a humbling experience. Humble! In the interview the copy brags about his Aston Martin, his ski chalet and his £11m in the bank.

His erstwhile owners (who still have stake in his business), Apax, are derided by Weller for bringing no operational understanding to his business. We are glad to be shot of private equity, he says.

He claims that the level of debt was never discussed at board meetings! Isn't the Chief Executive responsible for everything? Why didn't Weller put the debt issue on the agenda. If I were running a debt laden business, I doubt I would discuss much else.

Anyway, it's nothing to do with him. Not my fault guv. I paraphrase here, but he says, "Apax showed me one slide that debt was a good thing. It seemed ok to me so I thought no more about it."

Oh come on. Weller was desperate to get off the public market. He personally made a fortune as the business went private. Now the banks have lost their shirt, Apax have lost almost everything (in the Uk business at least), and the ceo says, depsite the fact that he blames PE for all his businesses woes, he'd do a private equity deal again because he got what he wanted out of it. You can almost hear the rush of private equity feet queing up to get some of that action.

I should think there are some lids blowing off the heads of APAX execs.

Meanwhile in another interview with Paid Content, Weller says all is well with the business and he doesn't need to make any more cost cuts oe sell off any assets. Yeah right. I wonder if the banks agree with that. They won't be interested in growth and aggressive expansion. They just want some of their money back.

There are moments when bumptiousness and larger than life straight talking can serve you well, but when you have laid off hundreds of staff, supervised the loss of your shareholders money, and the lenders have taken a big haircut, it's probably a good idea to go to work in the Mondeo rather than bragging about the Aston and the Ski chalet and to exude a bit of genuine humility.

And finally, one article reports that Helen Alexander is to be Chairman. That would be odd. The banks will want the chairman to be on their side, to hold the CEO to account. Helen A did a fantastic job at The Economist, but she is an old mate and admirer of TW's isn't she?

PPA Shepherd Slaughtered

2009-09-18T12:54:00.000+01:00

After just eighteen months in the job, John Shepherd, the PPA CEO has left with immediate effect. He was not a universally popular appointment amongst the great and good of the PPA members from the start, but there were few applicants of merit so the view was he was the best that could be secured.

I don't know what finally did him in but there were rumblings that Shepherd had appointed rather too many former colleagues and some members were unhappy about the closure of the PPA marketing department.

The PPA is a rather quaint thing in the modern media age. When business publishers are as likely to be orgainsing a conference, building a web application or assembling data as they are to be wiriting magazines, the notion of a trade body whose purpose is to promote periodicals seems rather anachronistic. What is needed is a completely fresh approach. Business publishers are as interested in negotiating with google as with the royal mail. Change the PPA name, start admitting members who don't publish magazines. Create an entirely new mission statement that reflects the modern world. Failure to do this will leave the PPA looking increasingly irrelevant to its dwindling membership base.

Centaur Revenues Collapse

2009-09-18T12:33:00.002+01:00

Centaur Media's annual results show that revenues dropped by around a third last year. Their preferred profit measure shows a £7m Ebitda, but this drops to £1.7m once amortisation and exceptionals are added back and just 0.9m after tax.

Centaur hopes that revenue will recover but during the downturn, even online revenues have dropped. Staff have been culled but revenue/head is still below £100k which even in the good times is too low to get rich on.

Dividends have been cut refelcting the uncertainty about the rate of the recovery.

Cash is tight - just 0.6m left. Happily, Centuar has a bank facliity and a clean debt free balance sheet but with revenues of just £60m, and not much reecovery expected soon, no really radical thinking and tight cash, expect a drip drip of cost cuts through the year.

RBI's Jones says, "Dont Panic!"

2009-09-09T10:56:00.004+01:00

The Summer holidays are well and truly over. Last week Emap started a senior management cull. Incisive Media got broken in two and now RBI declares a further round of urgent cost savings.

Global CEO Keith Jones, may have been lying on a sunbed somewhere hot and sandy, dozing after a good lunch when he suddenly sat up with a jolt of realisation that his business has more costs than it can live with.

Most people have thought that RBI has rather too much management rather than too little. Too many layers slow up decisionmaking and discourage risk taking. We might exepct some meaningful attempt to correct this. Jones says in his note to staff that, in terms, he has run out of patience with duplicate costs. I guess, in code that means, if you are a manager who eports to someone who reports to someoone who reports to someone who makes a decision, some of the people in the middle are going to be in the queue for a pink slip.

Jones also says that profits must grow by at least the rate of inflation. That means, whatever the rate of inflation, in real terms no growth at all. He also has an ambition to get 50% of his revenues from online. He can achieve this in two ways. WAit for the magazines to die off, or make some brave and radical decisions. His demeanour says he is ready to do this. He has had nine months to think about the plan. He might not have declared it all yet - but a plan he will surely have.

For RBI employees, who have strong union reps and don't much like change, this will be scary. The right choice for them all is to embrace change and not to shun it.

Less Strings to the Middleboe

2009-09-07T16:32:00.002+01:00

Many people think that business media companies have too many senior managers. Even those who tackle costs in their own area are vulnerable to being chopped themselves. Simon Middleboe, the CEO of Emap Inform, the print bit of Emap, has been culled from his job after 25 years service.

Incisive Split in Two as Banks Take Control

2009-09-05T13:44:00.004+01:00

After very lengthy negotiations with the banks who funded the growth and MBO of Incisive Media it looks as though a conclusion is close.

Ambitions to be a mega business media company, long part of CEO Tim Wellers desire, are over. The business is being split in two. The US business, which includes American Laywer will have seperate management and different ownership from the UK based business, which Weller will continue to run. The debt structure was different in the US and different terms have been agreed.

The US piece will be owned 49% by the banks. IN the UK the debt mountain of around £400m is likely to be halved and in which case private equity owner Apax are all but wiped out. That part of the deal is, we understand, not yet concluded.

In his note to staff last week Weller claims that his business is still operationally profitable.

His only job now, and the only metric the banks will be interested in, is how fast he can repay the remaining debt. This is no small task. The UK business has some very troubled assets. The dependence on legacy print is far too high. The overhead is too large for a sustainable future. Wellers note says that he "cannot wait to get back into the business" and that his business has "leading brands and "a proven strategy". What he doesn't say, is that that his strategy was proven in a world that no longer exists. He needs a new strategy if he is to stand a chance of meeting his banks expectations.

Weller and his team will not be short of things to tackle and his new owners will rightly be harder and more impatient task masters than any his business has had before.

MOD Spend Waste Covered in Gray Paint

2009-08-06T08:46:00.005+01:00

If you hire Bernard Gray, the mercurial CEO of the TES to have a look at your cost efficiencies, don't be surprised that the result is a damning report that shows profligate waste.

Bernard Gray was once an advisor to George Robertson at the MOD (which is why the mod gave him theig) and then went to be head honcho of CMPi via a spell as strategy director for Clive Hollick. If he has a reputation for anything its a brutal approach to cost management. The MOD/Government have now read the report and buried it according to press articles.

If Gordon Brown had asked anyone at TES or UBM what kind of report Gray might write he would have certainly rethought the appointment if what he really wanted was a nice warm cuddly feeling.

United We Fall

2009-08-05T13:21:00.003+01:00

You could argue that UBM has done a lot of things right. It has invested judiciouslyin some online,it has reduced its dependence on print and has a substantial events business. Even so,
Operating profit from print magazines dropped 77.9 per cent in the first of half to £3.3m, profit from events dropped 12.7 per cent to £37.8m and profit from data, services and online dropped 43.6 per cent to £16m.

According to Press Gazette, CEO David Levin thinks the world is over published and has already culled fifteen titles this year. More to come no doubt.

Oddly Levin claims that forward bookings for shows are up 5.9% but there is certainly a timing issue here. IN downturns, show sales teams get better on onsite contracting, but late sales all but dry up. It is not necessarily the case that good forward bookings now will lead to improved final bookings at show time.

This year has seen a drop in attendee revenues of 39% for UBM. I am hearing from many people that selling tables at awards evenings (another version of attendee pay events) is like selling hog roast at a Bahmitzvah. The recssion is long from over.

There is a growing realisation amongst b2b houses that sitting tight and waiting for the upturn won't cut it. What is not yet clear is whether they have yet calulated the vision for the business after the apocalypse.

Meanwhile following the collapse of the RBI sale, Reed Elsevier is raising cash through a placement. This will reduce debt but also be dilutive for shareholders. Mor importantly, with much of the Reed Elsevier business market leading and high priced, and the remainder in the same mess as the rest of them (RBI) it is not yet clear what Reed can do to provide the next generation growth. Reeds share price went backwards on news of the placing and has not really gone anywhere in some years. Its a blue chip stock. Reed Elsevier has less to worry about than many (it has manageable debt, lots of profit and stable revenues from information) but its challenge is that it won't grow fast when or if the recovery comes. So for different reasons, Reed has the same challenges as every other business media company.

Morning Advertiser Watches Sun Set

2009-07-29T09:44:00.003+01:00

A downturn in media is tough, but if you are in the pub trade media the world must be awful. With hundreds of pubs closing every week, the fate of the Morning Advertiser, one of the oldest trade mags in the world, looks bleak. Both the Ad Director and the Editor have left, and in headcount won't be replaced we understand. Circulation has been chopped by five thousand to "focus on the most successful pubs". You might have thought it was the least successful ones that most needed the insight provided by the Morning Advertiser. Hey ho. These struggling pubs are being offered a paid subscription - which almost none of them will take up - probably because they haven't got any money.

The MA used to a daily newspaper for the licensed trade. It has faield to get to grips with online, is serving a market decimated by the recession, tax and the smoking ban. Whilst cuttting costs is bound to be necessary, a better plan is needed if this and titles like it are to have any hope for long term survival.

Informa down

2009-07-29T09:18:00.004+01:00

Informa has seen a drop in profits, but mostly due to restructuring costs. With a a good subs/paid info base and a strong events portfolio Informa is better placed than most to ride out the storm - but only if there is recovery soon. Delegate sales to conferences remain tough and will get tougher the longer the recession goes on.

He Loves Me, He loves me not, He loves me...

2009-07-23T08:32:00.001+01:00

It now appears that Reed Elsevier is not going to sell RBI after all. The new CEO, Ian Smith, has worked out that there are some assets inside RBI that are worth keeping. Total Jobs is having a hard time in the recession but when the economy recovers demand for job advertising will once again increase. Providing Total Jobs doesn't get overtaken by an emerging technology solution, it will prove to be a long term profitable business.

He also likes the data business ICIS, whish serves the chemicals/petro sector. Assets which he can't cross exploit with other Reed assets may yet be sold.

The risk here is that Reed will not be brave enough and end up selling a handful of assets. If the core of RBI is to be retained a radical pruning is required. This is not only about trimming assets, it should also be about a fundamental change in the way Reed does business. Getting rid of half the assets wouldn't be amistake. Not only would this allow RBI to focus on a small number of markets (in the 21st Century media world where we have to be experts in many things not just publishing we might be wise to chose between doing a feww things in many markets or many things in a very few markets) but it should also change the way in which its its overhead base is scaled.

It would bei n the best interests of shareholders if Smith pressed his team to carve out some of the stronger assets as well as just those it considers weak. In other words, RBI should not keep assets just because they still look profitable, but only keep those where it believes it can extract substantial strategic value.

Incisive Still Subject of Rumours

2009-07-16T09:00:00.004+01:00

Bill Pollack, the head of the US part of Incisive Media said this on his own blog,
"You will by now have seen Tim Weller's email to the full staff at Incisive Media responding to an article that appeared yesterday on the Financial Times' website. Just so we're clear, that article primarily concerned the refinancing of Incisive UK's debt and reported various rumors which may or may not prove to be true"

So the deal is not yet done. There are numerous rumours around about how the negotiations are going on the UK debt. One thing is certain, APAX and the banks have lost a lot of money. Let's hope the management strategy, if the management survive or chose to stay, is better than "we are waiting for the market to recover".

Also note that the US business is financed seperately from the UK business. The US business which includes Risk and American Lawyer is arguably in s abetter plac than the ad based print business in the UK, hence Pollacks distancing.

Barking Up the Wrong Tree as Barkers Dies

2009-07-14T11:29:00.003+01:00

If you are in b2b media you can't but help but have noticed that recruitment advertsing is a little hard to come by. Barkers, the oldest and one of the most highly regarded of recruitment agencies sunk in to the mire of collapsing revenues and too much debt earlier this month.

Recruitment agencies used to make 10-15% commission on ads that cost thousands of pounds plus the creative fees and the production fees. Now they get to book the odd print ad and lots of job board ads at a £100 a pop. Ok a bit a of a simplification but you get the point. Couple that with a load of debt and phut!. In a prepack deal the Barkers assets have been bought by Penna, just days after 60 staff were laid off by Barkers. Those poor souls won't now even get their redundancy as the leave behind company is wound up. For media companies the position is also grim. Some I am told, are left with bad debts of hundreds of thousands of pounds.

There is nothing illegal about pre pack deals, but it leaves a sour note for creditors and many staff.

Recruitment advertsing is going to be in the doldrums for a t least two years. My guess is that Barkers won't be the last casualty.

2009-07-07T15:16:00.002+01:00

RBI has announced it is selling Travel Weekly and Gazeteer to Clive Jacobs - the man who used to own Holiday Autos and has always craved a position of influence in the travel industry. He is rich, but is he wise?

No info on the price paid. It's pretty likely the mag is not worth much but there is money in Gazeteer which is moslty online.

Bubble Bubble Toil and Trouble

2009-07-07T13:13:00.005+01:00

We have known for a long time that business media companies are in trouble. But it is only just now that the chickens are coming home to roost. The failed sale of RBI will be seen as a watershed moment, after which the reality of the horrors we face began to be faced up to.

Investors in Emap have written down the value of their investment. Investors in Incisive (which overlap) are coming to terms with the news that their equity is all but worthless and the banks will end up owning the business.

William Reed has culled at at least 20% of its headcount. Centaur has been doing the same as it struggles on with reduced profits and little cash (but luckily for them little debt) Most other business media companies are reducing their headcount progressively, chasing the revenue downwards and hoping that things will get better.

Every week sees more magazine closures. There is no end in sight to the ad gloom. Recruitment has gone for ever and display is mortally wounded.

The hope in online is often countered by the grim reality of poor ad revenues there too. Emap announced last week that it is putting much of its content behind a subs wall, having discovered that giving it all away is hurting paid copy sales and the extra ad revenue doesn't cover the gap. This flip flop in strategy won't work not least until they stop worrying about print cannibalisation

Everywhere we look the strategies are defensive. Where is the new model? Where is the creativity that will turn the old magazine publishing businesses into growth businesses for the future? Yes there are pockets of interesting things happening in all the business media enterprises, but none of them have a whole business vision.

Meanwhile in idle tittle tattle I hear a rumour that Les Kelly, the Wilmington exec who presided over the closure then sale of Press Gazette is leaving the business.

Banks Take the Helm At Incisive

2009-07-02T08:54:00.003+01:00

The FT reported yesterday that the banks who leant the debt that enabled Incisive Media to grow like topsy are in deep talks with Apax and the management about what to do next. Although Apax want to retain some equity and are prepared to put some more money into the pot the banks appear to have lost patience and now own Incisive in all but name.

You can bet that the FT numbers are not 100% correct but it looks as though Apax will end up being diluted from owning around half the business to owning about 2% of it. The management are keeping something north of 10% (which is a lot given that the banks have lost hundreds of millions and Apax lost its shirt. This isn't a done deal yet and things could yet change.

We should be interested not only because Incisive is a big b2b player but also because we as tax payers own RBS, the main lender. I am sure we all want Tim Weller and crew to make some more money, but lets hope not too much of it is ours.
;-)

EMAP Users will pay to be Informed

2009-06-28T19:24:00.003+01:00

Emap Inform is going to put much of its content behind a pay wall. I have a simple question. Is this the same content that is now available for free? If so this is doomed. Hopefully this is new premium content. If it isn't all that will happen is traffic available for ad sales will drop and information sales will be modest.

Emap Inform of More Redundancies

2009-06-27T09:51:00.003+01:00

Sorry for lack of posts lately. As sometimes happens in the real world, I have been busy. The pain is not over yet. Emap Inform has announced more reducndancies even though the business continues to do well (according to its CEO). The MD of Inform, Simon Middleboe, says the changes are about becoming a multiplatform business and building paid content. Some might think that sounds like a strategy hooked onto the back of inevitable cut backs as the print recession gets worse.

This all comes on the back of Apax writing down the value of their investment in Emap. Apax of course have already lost their shirt on Incisive Media.

Emap Worthless says Apax

2009-06-14T15:49:00.002+01:00

Poor Apax, who are invested in both Incisve Media and Emap have just written dwon their equity investment in Emap from £300m to nothing. Accounting rules require a marekt value of assets to be applied at the time of posting accounts. According to the Guardian, GMG chief Carolyn McCall says that Emap has "intrinsic value" (I though vlaue was something to do with Money) and maks £100m a year and profits are up.

Uh kind of. The truth is that on sensible view of value if Emap were sold today it is highly unlikely that any money would be left over after paying off the debt to hand to shareholders. It is also true that the mag business is having a tough time and the exhibition business is patchy and digital has a long way to go to be a major contributor to growth.

William Reed Get All Digital

2009-06-02T12:55:00.003+01:00

William Reed has bought an Internet business! Having struggled for years with what the net is all about, the WR management have done the wisest thing and bought an online only business called Food Navigator.

Promotion to WR audiences should accelerate the subscription growth and at first glance the Food Navigator people are exploiting lots of the revenue streams that WR will need to learn how to deploy if the 100 year business is to survive.

With most of the the profits in WR being in The Grocer, and most of that driven by copy sales and job ads, both of which are terminally compromised this may not be the most expensive deal that WR has ever done, but it is certainly the most important. Let's hope they know how to manage the integation.

Ads Melt Down In the US

2009-05-28T11:54:00.003+01:00

Just when we thought we might be turning the corner, news from the US is that B2B ads dropped by around 30% in Q1. Trade show revenues were down 20%. Ouch ouch ouch!

Goldmans Signals Media Recovery

2009-05-27T14:47:00.004+01:00

They think its all over. But it isn't yet. Goldman Sachs has increased its share price target for a handful of busiiness media companies including Informa and Reed Elsevier. Does this mean as Press Gazette has speculated that we have turned the corner in this media recession? Erm no. The truth is that the share price damage done to the best of the business media companies has been overdone, and if you wanted a safe safe place to put your money, Reed Elsevier wouldn't be a bad bet (when compared to other media companies.)

But lets get real about what is going on here. The peak of the last cycle was around 2006. In that year Reeds share price peaked at 779. Today it is about 530. Pearson peaked at around 800 compared with 666 today. Informa was at about 500 in 2006 and today is at about 250. UBM (not mentioned in the Goldmans note) had a peak of around 750 in 2006 and trades at 415 today. What this tells us is that even these relatively blue chip stocks must improve by around 50% to recover their value. How likely is that in the forseeable future?

Take a look at the P/e ratios for the business media group. Reed already trades at 23, nearly twice the price of any of its peer group. No upside their without strong growth. UBM, Tarsus and Informa are all between 15 and 17 reflecting their common issues as event organisers (Informa would be stronger were it not for its debt mountain). Centaur, Huveaux and ITE are all in the range 6-10; not bargains I am afraid, but rather a reflection of their even weaker prospects for revenue growth any time soon.

Cost cutting will ensure a stabilisation of profits. Revenue decline may slow or stop, but investors expecting a return to average revenue growth rates are goingto be disappointed in the short to medium term

Never Mind the Quality - Cut the Costs.

2009-05-21T16:26:00.004+01:00

This obscure blog about horticulture pulls a lovely quote from the Production Director of Haymarket,

"Previously, we concentrated on quality as number one, followed by the environment and costs. Now all our energies are focused on costs." Well. It's starkly honest you would have to agree but I bet it not many of the Hayamrket sales teams will be repeating the sentiment in front of customers.

Anyway, in a memo to Chris King (the aforementioned Production Director) just because there is a recession on doesn't mean you should abandon quality - otherwise when the recession is over, although you won't have much cost, you won't have much revenue either.

Digital is Half the Business Print Ever Was

2009-05-12T09:04:00.004+01:00

Not everyone agrees with my rather gloomy view of the world, but over in the US despite the fine words of the leaders of B2B companies, the figures show a picture of continued and accelerating decline.

Although online revenues have continued to grow, even in the US the growth is half the dollars of the decline in print. The table in the link shows a decline in the last year of $103m in print based revenues and an increase of $47m in digital revenues. This confirms this bloggers view that even when the migration is complete, business media companies are going to need to be smaller and leaner beasts than they have been in the past, and by a scale factor that few if any of the bsuiness media leaders have yet owned up to or realised.

Five Reasons to Temper Cheerfulness in B2B

2009-05-11T09:09:00.003+01:00

The general rise in business confidence filled the pages of the Sunday newspapers business sections at the weekend. Share prices have risen in the last few weeks reflecting a growing mood that the worst is over. This is no time for media owners to breath a sigh of relief however.

Even if we accept that this is the bottom of the cycle, it will be at least a year before there is any recovery in the recruitment market. If display advertising recovers at all it will be slow and never to the levels we have previously seen. The demand for online solutions has not gone away and the the revenue models for thes businesses is for most media companies unproven, and even when it is proven its scale will be smaller than the old print model.

Incisive's Tim Weller was speculating at the FIPP conference that the days of the controlled circulation model are numbered, Rupert Murdoch has postulated that his business will move to paid content model (It is often unwise to bet against Murdoch - but surely this hope over experience) Thomson Reuters are veeling confident in their future, and the events model for the likes of UBM is not yet a busted flush and Reeds high value infomation model is dull but solid. But let nobody think that all is well.

Check you business out against these simple questions,
1) Does your business have a lot of debt?
2) Does your business rely on print advertising for more than 30% of its revenue?
3) Is your online revenue less than 25% of your total revenue?
4) Is your total revenue/employee less than £100k/year
5) Do you have the same proportion of your turnover as overhead as you had last year?

If you answer yes to all more than three questions then there is considerable pain yet to be felt.

IDG Takes Axe To Staff

2009-05-03T09:43:00.005+01:00

IDG, global tech information company owned by the patriarchal Pat Mcgovern cut pay for staff a few weeks ago to avoid the need for further layoffs.. Now, it has announced it is culling 8% of staff in the US. There have already been cuts in the UK and there may be more.

Oddly in this fascinating recent interview with McGovern he brags that revenues are growing. Where they have killed the print mag and focussed on the online revenues grew by 10% he says. Something doesn't add up here. Two things are really going on. The downturn is being used as an excuse to rebase costs for the new model and the downturn is hurting IDG more than McGovern cares to admit.

Nevertheless, read the article. It is one of the clearer expositions of a possible strategy for business media companies that I have read

IDG is one of the most advanced media houses in the journey from print to online and still the pain of the downturn is acute

Informa Takes Steps to Reduce Debt

2009-05-01T10:01:00.003+01:00

The debt laden Informa has asked its shareholders for more money to use to reduce it's leverage. It judges that this is better than selling assets at poor prices. Infomra has done well to get this underwritten and reflects the fiath the City has in its management and lng term strategy.

Coould Incisive pull off the same trick. All the rumours are that trading is grim and and getting worse so it could tough for them.

Informa had better hope that their conference business holds up well in the coming months, otherwise they could find themselves in the same position all over again at the end of the year.

Penton Media in More Trouble

2009-04-28T16:25:00.003+01:00

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.

RBI and REC Under Profit Pressure

2009-04-27T08:47:00.004+01:00

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.

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Zombie Publishing as Lightening Strikes Press Gazette

2009-04-23T08:49:00.005+01:00

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.

Incisive and Emap Improve Profits

2009-04-14T09:50:00.004+01:00

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.

Commentators Press Gazette to Continue

2009-04-14T08:28:00.006+01:00

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 Life Support Turned Off

2009-04-06T13:11:00.004+01:00

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.

Travel Mags in Rude Health say Editors.

2009-04-01T08:53:00.003+01:00

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!

Travel Mags in Trouble?

2009-03-31T08:22:00.004+01:00

Rumours uncomfirmed that Penny Wilson Editor in Chief of RBI's Travel Weekly has gone. Also unconfirmed that UBM's TTG is to go online only.

I guess we just have to wait for the news about how any such change reflects the continued success of the magazine rather than an admission that this would be further evidence of the urgent need for a new magazine model.

Incisive Media Worthless - Ingenious

2009-03-30T12:28:00.004+01:00

The Sunday Telegraph reports that Ingenious Media has written off its stake in Incisive Media. They were part of the investment fund put together by Apax to do the deal to buy Incisive when it went private. With so many of the large business media companies being in private hands we can't see how bad trading really is. Management at Incisive Media claim the business is still very profitable, but we have to conclude, that Ingenious at least has concluded that the outlook is not great and the mountain of debt is too steep to climb.

We would agree with that view. Incisive will have to do three things. A refinancing/ debt equity swap/injection of funds from Apax is now almost inevitable. Second, like other business media companies, a move to a new low overhead model is now urgent. Waiting for a recovery just will not do. Third, Incisive should consider the sale of some assets - even if not ideal, to focus on a smaller number of core competencies and to pay down some of its debt.

DMGT Propped Up by B2B

2009-03-23T12:30:00.002Z

DMGT is seeing a pretty horrid melt down in regional newspaper revenues but claims the B2B division is holding up well. In part this is another company with a big trade show exposure (Like United Business Media) which is holding up better than companies with a bigger print exposure. But even B2B, if we decode the update from management, is having a tough time.

The announcement claims that B2B revenue is up 15% in the first five months of the year is caveated by a note that this is mianly due to exchange rate movements. In the five months at issue the dollar sterling exchange rate has moved 24%. My guess is that in real terms, b2b revenues are down.

Whilst B2B is holding up better than regional newspapers for now, let's just hope that what is happening in local papers is not a vision of the b2b future to come.

More bad News for Trade Shows

2009-03-20T15:10:00.002Z

News from The USA that forecasts a 17% decline in trade show participation this year. UBM recently reported a 5% improvement in rebooks, which tells us that this has not affected them yet. You have to fear that it will. Rather like recruitment, revenue drops in trade shows trend to appear as the same number in the profit fall. There are fewer staff to cut and tennancy costs are already locked in for the year. Time to hold your breath and hope this forecast is wrong.

Emap says digital content needs no direction

2009-03-16T14:36:00.004Z

One of the big challenges for b2b companies is how to move their digital content strategy forwards. In a world where magazine editors need help in understanding all the things that can be done and in a worlds where sticky content is much more than just news and features published online, you might have thought having a digital content director would be a good idea. Um. Well not at Emap apparently, where the position is being rested.

Incisive Wipes 2% from Payroll Costs

2009-03-16T08:03:00.004Z

Incisive Media, on of the debt laden b2b houses has told staff to take a weeks unpaid leave at Christmas. According to Press Gazette this will save £1m this year, implying that the total payroll costs are £52m. This initiative is to minimise redundancies according to UK CEO James Hanbury. The maths says the opportunity cost is 30 jobs. Like so many of these initiatives, whilst necessary, this approach does not address the fundamental change in the economic model that will be required for long term success.

On a technicality, Incisive are reducing pay each month as the mechanism to pay for this, so as to avoid a very small payment to staff at Christmas which is when the leave has to be taken. Deductions from pay require the permission of the staff. I doubt that many staff would say no under pressure to save their colleagues jobs but what if someone refused to give the company permission to make a payroll deduction? Does anybody know what the legal position of the Company and employee would be?

Euromoney Not Working as Much

2009-03-13T08:12:00.003Z

Just a few months ago, Euromoney was bragging about how well it was doing. Now it is asking staff to take unpaid leave. Either the trading in the company has seen a horrible drop or this is opportunism by the management to save some money using the excuse of the downturn. My experience is that in a downturn everyone has to work harder; asking people to work less seems perverse.

The share price is down 55% on a year ago. Profit last time out was around £43m. Market cap is around £180m which some might think a low multiple for a business which has substantial subscriptions income.

The drive to save costs at Euromoney could be as much to do with the needs of major shareholder DMGT as it does with Euromoney itself.

It seems as though even paid information company employees cannot consider themselves immune from the current malaise.

Musn't Grumble

2009-03-07T08:36:00.002Z

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.

Centaur confirms Profit Drop as RBI Doesn't strike

2009-03-01T11:40:00.002Z

Common sense has broken out at RBI as journalists vote against strike action. Meanwhile Centaur has published its interim results showing revenue down 19% in the six months to December. Like others, Centaur is struggling to offer any guidance on future earnings and the uncertainty has punished the share price - now down to 19.5p valuing the company at less than £35m. Cash has been consumed in share buy backs leaving only just over £1m in cash on the balance sheet.

Management has confirmed that the dividend will still get paid however.

EMAP Informs that All Mags are A4

2009-02-25T16:02:00.004Z

Emap Inform are feeling the pinch. All their mags are going A4 and are to be printed back to back to gain production efficiencies. Some titles will have to change their publication dates to fit.

Erm. And that's it apparently. Just cost savings. No new thinking - at least none thats been annoucned. If the revenue falls some more what next? A5?

The problem that the debt leveraged comnpanies have is that they are having to do everything to save cash regardless of the publishing thinking. You can't blame them for that but if the new model is this:

Less editorial written by fewer journalists, published in magazines that all look the same regardless of what readers want or admire, with fewer pages on crappier paper with no job advertising,

then I fear for the end may come sooner than we feared. There are lots of things that could be done. One commentator rattles on about this here. It may or may not be right, but least its more than just cutting costs.

RBI Profits Collapse. Nobody Surprised!

2009-02-20T11:28:00.002Z

The scale of the horror of traditional business media is in sharp relief today. Reed Elsevier has produced great results largely because its subs based business is so robust - but the profits from RBI across the globe have fallen to £55m. The report in the FT says this is down from £90m but at the time of the proposed sale the talk was of profits of £150m.

If we valued RBI on the same profit multiple as Centaur who gave a profit warning today, then its market value would be less than £200m! No wonder the sale deal couldn't get done.

Also announced is a £112m restructuring programme for RBI. The current strike ballot over 35 redundancies in the UK is now in sharp relief. There is worse to come.

Let's hope the restructuring programme has some innovation in it as well as cost cutting.

Reed says it has no plans to close any titles.

Centaur In more Trouble

2009-02-20T08:22:00.004Z

Centaur Media continues to stagger from one piece of bad news to the next. For the first time since it floated, the Board has issued a profit warning as recruitment revenues slump by 2/3rds. The thing about recruitment is that every pound of revenue fall is almost a pound of profit fall.

Although costs have been cut and some titles closed, more radical thinking is required and urgently if this business is to be saved from the triple whammy of paridigm shift, recession and management inaction.

The share price is down to 23p (down 1op this morning) valuing the business at around £33m
- more than £100m less than it was worth when it floated. Management and the City have been surprised by the deterioration in trading. Pity they didn't ask any of us eh?

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

2009-02-18T13:07:00.005Z

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.

Strike Threat at RBI

2009-02-16T13:06:00.004Z

Press Gazette reports ahead of Reed Elsevier's results that staff at RBI are holding a postal ballot on strike action to protest about redundancies.

Nobody likes to see job losses, but RBI has the what must be the most generous severance terms on the planet. The reality is that no media company can avoid job losses if it is to survive. RBI has a greater need than most to take an axe to its cost base. If the complaint is about the process that's one thing, if it is about the principle that's another. When it's raining there is no point in complaining that it's cloudy.

EMAP Inform Freezes Pay

2009-02-11T10:54:00.003Z

Over at Emap Inform, the division where all the mags are, MD Simon Middleboe is freezing the pay of anyone earning over £50k. He his following a trend here and is not the first business media company to take such a view. I think this strategy is unprecedented in previous recessions howver, and is a sign of how tough trading must be. Emap of course is owned by APAX and GMG and has eye watering debts.

Although it is hard to see that the saving is huge (I estimate that not paying anyone in EMAP a pay increase this year would avoid cost increase of around £1m in a full year) it is symptomatic that every penny is starting to count. Intersting that the pay freeze policy only applies to the magazine division which sends an interesting signal. If you are in magazines - you are on your own.

Incisive breaches Covenants

2009-02-04T10:28:00.003Z

Incisive Media breached its bank covenants in December. With £400m of debt and weakening trading the options are limited. Either Apax will have to inject more capital or there will be a debt for equity swap.

Either way all media businesses with high leverage will be sweating. On smaller deals banks have been prepared simply to rewrite the covenants (for a fee) but on this one, the bank will want to make sure it does nothing to increase its risk exposure.

Lord Heseltine Still Floating

2009-02-04T08:45:00.003Z

According the The Austrahttp://www.theaustralian.news.com.au/business/story/0,28124,24993101-7582,00.htmllian, Lord Heseltine of Haymarket is saying that the recession means his firm will be treading water for a while. I thought treading water was what you did in shark infested waters to keep yourself afloat before you drowned or got eaten.

If it was me, I'd swim for the shore.

Findlay Publishing in Administration

2009-01-30T09:39:00.004Z

Update: Bob Findlay Chairman has purchased the trade and assets of the business and rebirthed as Findlay Media. Business as usual apparently.

Perhaps the first Oh My God moment of the year, Findlay Publications has gone into administration. Findlay has been the doyen of manufacturing and engineering publishing for more than thirty years. It led the way in the UK with sophisiticated controlled circulation publishing. Founder, Bob, retired just a couple of years ago keeping his ownership of stately Franks Hall which used to be the main office.

Moles tell me that the business will or is likely to emerge from administration in some form. Any news gratefully received either in comment or by email at libertyskyline@hotmail.com

Is this a failure of innovation, the demise of manufacturing, lack of investment in people and new digital products, or just rotten bad luck?

Crikey.

RBI UK Starts/Continues Culling Jobs

2009-01-29T10:33:00.003Z

The first signs of the cull at RBI are emerging. The Guardian reports that 35 redundancies have been announced at UK RBI. At first I thought this must be a mistake and that they have left the zero off the end, but I have checked it out and apparently not.

However, in addition to the redundancies there is an effective hiring freeze so more jobs are likely to go. Also there has been a slow drip, if that is the right word, of redundancies and non replacements over the last few months.

However, whilst no one wants to see people lose their jobs, the plan needs to be more radical than this. Maybe it is.

VNU in Debt Mire

2009-01-29T08:31:00.003Z

The Times has been reporting on the woes facing 3i owned VNU. You will remember that 3i bought VNU at the top of the market, selling off the Nielson business and seperately the UK business to Incisive Media. It is said that 3i are about to break their bank covenants which means only two solutions are available. Either 3i must put in some more equity, or the banks will seek a debt for equity swap.

3i have apparently said they won't do the former so the latter is feeling liek a bit of a certainty. All debt leverage business media companies must be worried, Incisive Media, backed by Apax has around £400m of debt, Informa too. The EMAP deal has debt also.
On a smaller scale so does Ocean Media.

Banks may demand the sale of assets to generate cash as an alternative or complementary approach to deby/equity swaps. If any of this happens no one will want any of this in the public domain if at all possible. To be clear, I am not saying this will happen to other comapnies as it appears to be happenning to VNU, but no one would be surprised if near term strategies for these businesses were determined by shrot time financing concerns rather than strategic vision.

All the more reason to be believe that the winners in five years time in the battle to be the business media company of the future have not yet been identified.

Business Media Should Merge Back Offices

2009-01-27T12:13:00.005Z

All of the business media publishers are facing unprecedented challenges. The economic downturn, long term decline in magazine profitability, a threat to profits from events, the challenge of making money from the web and so on.

Publishers long since worked out that there was no competitive advantage in running their own circulation management systems or print plants. Exhibition organisers long since contracted out their on site registration. But why has nobody thought of eliminating permanent costs from other areas of hygiene activity?

One of the benefits of APax owning both Incisive and Emap was the merger synergies. They never happened as crunching the two businesses together would have required a refinancing of the whole deal - and you can understand why that didn't happen. But what is to stop these two businesses sharing back office overhead in finance. Locate the credit cotnrol desks for both businesses in a single location where labour is cheaper than in central London, with one group management providing services to both companies on a SLA.

If it could done for these two companies, why not invite RBI, UBM and Informa to join the party? Each party would own an equity stake in the service company which would be run on a cost plu basis, with any profits returned to the shareholders. Make an agrement to protect the confidetiality of data. Consider inviting smaller publishers to enjoy the benefits of the solution for a fee. Cost savings and a profit share too!

Business media comapnies have worked together before. Tower, the circ bureau grew its business in the nineties on the back of a concord agreement with a cadre of blue chip publishers. The Excel Exhibition Centre was built with funds secured from RBI Emap and UBM amongst others.

How big are the savings? Well lets imnagine that back office finance costs 5% of turnover. Lets pretend we could save 20% of that. If we could process £1b of turonver thats a saving of £10m a year or put another way - on a 10% average profit margin, the equivalent of offsetting £100m of revenue loss. Mmmm.

Seven Percent of RBI Staff to Go Say Reports

2009-01-27T10:11:00.002Z

Paid Content is reporting that 7% of RBI staff are being laid off. This story is about the US division that includes Variety, but is surely the first signs of a wider cull of costs that will be ipacting on the UK too. Up until last week staff at RBI appeared none the wiser about the nature of the impending cuts but expect news very soon.

The ansswer for RBI is more fundamental than just cutting costs. A new way of publishing magazines must be found and/or a cutting down of the scale of the business to focus on activities and assets that have a good forward growth.

Online jobs in Decline as Mags Launch and Close

2009-01-19T12:12:00.004Z

Good news for RBI owned Total Jobs which has topped the Hitwise rankings for most traffic in the online jobs market, beating Monster et al for the third year running.

Bad news for all of them however as Monster reports a fifth consecutive month of decline in job postings, including a massive 11% fall in December alone.

No surprise I guess that there are more people looking for fewer jobs.

Meanwhile, and arguably more surprising a number of b2b magazine launches announced this week, including Dennis launching a title for the b2b poker industry, whilst Centaur is continuing its process of culling underperforming magazines.

Note also a b2b mag launch in the finance sector, for wealth managers as online solution provider Citywire moves into dead trees for I think the first time. Amazing.

Why B2B Blogs Can Be Annonymous

2009-01-15T12:58:00.007Z

There has been a bit of rather odd, imho, discussion about the annonymity of some blogs about business media. John Welsh, in particular has been harshly critical of the practice.

He argues that without a byline such blogs should not be approved of. He has even gone so far as to remove links to blogs without attribution. Conversly, a comment to his article notes that The Economist has always published without bylines and this has been viewed as a strength.

There are not many B2B media blogs. Me, Private Frazer, Businessmedia,all post without bylines. I can't speak for the others (unless we are all the same people of course ;-)) but I can defend my own view.

1) You knowing the author might play to my vanity but I do not believe it would improve your appreciation of the story. It is possible the reverse might be true. I want you to read these words for what they are. You should not judge them because of what you may think you know about me.

2) Knowing the identity of the author would satisfy your curiosity but it wouldn't make the writing any better or worse. So why is annonymity so objectionable?

3) It is not true that knowledge of the authors identity confers authority. Whilst not overtly annonymous, I bet almost no one knows the author of the news read on the BBC? Or the writer of the Leader in The Times?

In short, blogging is not one thing, or one way of doing a thing. Some blogs are excellent and bylined. Some are truly awful and I wish I didn't know who had written them. The same applies to those that are annonymous.

Your judgement of this blog and others in the B2B blogosphere should be based on their content. Most of the feedback I have had suggests that judgement on this blog at least, is broadly favourable. Not all of you agree with me all the time. Some of you get quite cross. That's all fine. I am not doing this to make money, or to fan my not insignificant ego. I am doing this because I care about the future of our industry and I want us to challenge how we think about it. I want us to take our heads out of the sand and recognise the scale of the challenges we face. I want us to debate what we are doing and how we are doing it. I want us to say the unthinkable, challenge the immutable and support the irrefutable.

As we and others have noted before, the mainstream media media pays almost no attention to the business media sector so the the independent writers are much needed - all of us, John Welsh, Peter Kirwan, Adam Tinworth, Paul Conley, Private Frazer, businessmedia.co.uk, Rory Brown ,even me.

And if you want to know who I am, I am the Business Media Blogger. I'll even change my name by deed poll if it makes you happy John!

More Closures Mergers and Sales in B2B

2009-01-15T11:15:00.005Z

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?

Trade Shows Sick but Not Dying

2009-01-09T07:50:00.005Z

It has been pretty quiet in B2B land in the first week of the New Year as managers try and assess how bad the first quarter is going to be. Plans are being made for further redundancies in many of the b2b media houses. Meanwhile real concern is now being expressed about the outlook for trades shows. Peter Kirwan notes the recent Lex article (availale to FT subscribers only) which implies that the trade show model is structurally as well as cyclically damaged.

We have postulated for some time that the demise of print publishing will infect trade shows too. Attendances, as the FT points out, have been going down for some years. Meanwhile the cost of attendance for exhibitors is punishing. The UK is one of the most expensive places in the world to exhibit. A squeeze on budgets, an urge to avoid unecessary travel and a niggling doubt about the cost effectiveness of shows all bode ill. Thats one of the reasons that UBM is experimenting again with "virtual shows".

Rather as with magazines, the answer is to reinvent the trade show model. Most organisers will already tell you that a room with rows of booths is not the best way to win new visitors, but few organisers do much else.

Exhibitors don't want to exhibit. They want to meet potential customers and seed new orders. A growing area of interest for organisers is bespoke events where a tailored event solution is created for a customer. When an exibitor spends £20000 on a booth at a trade show they spend four times that on everything else (travel, stand design and build etc), most of it with contractors not with the organiser. If trade show companies thought about how to take the £100000 from the customer by building a bespoke event solution for them and their customers, new profits can be made.

Meanwhile, in the short term, expect a rough ride for this years rebooking of exhibitors at 2009 trade shows.

2009-01-05T08:13:00.002Z

A Happy New Year to you all. Made any resolutions? Peter Preston of the BBC thinks that the only doubt about the economy this year is whether this will a bad recession or something much worse - at least thats what he said on the Today Programme this morning.

That sound like a good planning assumption to me.

Thanks to all of you who mailed over the holidays with thoughts and suggestions for what we might cover in the year to come. I'll try and take it all in to account as the story unfolds.

Meanwhile, lets all be safe out there.

Informa Looks to Reduce Debt

2008-12-22T08:22:00.003Z

The Independent reports that Informa is considering seelling some assets to reduce its debt burden. There have been rumours that Informa is concerned about the possibility of breaching its banking covenants. Certainly the City has been marking down its stock because of the high level of gearing.

Covenrants get tighter as time goes on. They are agreed on the basis that the business grows and in interest cover improves (thats profit/interest due). As trading weakens a breach becomes ever more likely. Informa is not admitting to any possible future breach and they remain confident, but not so confident that disposing of assets to raise some cash is not being seriously considered.

It is not a good time to sell anything - just ask the Board of Reed Elsevier.

Next year I am expecting at least one "oh my god!" moment when something really ugly happens to one of the big players. Informa is already putting down a marker that they don't want it to be them.

2008-12-18T15:31:00.002Z

Apple has decided it will be backing away from its support of the Macworld show organised by IDG. Other exhibitors are also reported to be reducing their committment to the event.

If one of th worlds leading companies thinks it is no longer valuable to soend its marketing buck supporting a trade show that is all about selling its own stuff and stuff related to its own stuff, then we have to expect the world to get tougher for all trade show organisers in 2009.

Trade Shows Fall into Recsssion in US

2008-12-17T14:22:00.003Z

Readers of this blog will have been expecting this news for some time, but American Business Media has announced that in the US trade shows have seen a decline in revenues in 2008 of 3.7% in the first nine months.

Smack the Dead Donkey

2008-12-16T15:29:00.006Z

What a year it has been. We began with Emap being sold in what turned out to be the last major business media deal before the crunch. Reed announced in February the sale of RBI and then spent all year not getting it done. All the public business media companies saw their share prices collapse. No business media enterprise was exempt from redundancies. Magazine titles closed or merged. The tech sector led the way with Computing merging with IT Week. In the US PC Magazine and Techworld switched off their print editions all together to concentrate on online only.

Senior managers were ousted from Centaur, United Business Media, Wilmington and EMAP to name but a few.

What are we to expect in 2009. Is this the beginning of the end, or just the end of the beginning of the end? Can we expect a renaissance in the business media zeitgeist? It was just five years ago that city analysts were spouting the mantra that the future of media WAS business media. It was on the back of this optimism that Centaur floated at a valuation of £140m. Today the same analysts and city brokers value the same business at less than £50m.

This industry demise was not a bubble that burst, rather one that deflated rather quickly making farting and popping noises as it chaotically whizzed around the room look for somewhere to land in a flacid heap.

The tragedy is that although the crisis has been made worse by the credit crunch, so much of what has happened was avoidable. The impending crisis has been visible for a long time. I started this blog back in 2006, way before the credit crunch, and it was clear then that our model was doing its dying.

But we are where we are and it is time to turn our attention first, to what we think might happen in 2009 and then to consider what we must all do to rebuild our industry.

There will be some who say that this is all an exaggeration, that the fundamentals are good. Experienced management teams are in place, the business media has led the way in developing events and data business and looking at work flow solutions and migrating to the web. Let me remind you of the view of the CEO at Hanley Wood when he accused us back in February of "underperformance, cowardice, technophobia, inferiority, complacency, coziness, stinginess, cluelessness, disorganization and dullness."

The management teams have too often been in the same place for too long. They are mostly magazine publishers trying to adapt to the new world. Their staff are frustrated and frightened. Lemmings led by donkeys as one rather harsh observer of our industry put it to me the other day. Yet we have some hugely able leaders at the top of b2b, Jones at RBI, Heseltine at Haymarket, Gilbertson at EMAP, Levin at UBM, Weller at Incisive, Brady at Wilmington to name but a few. There is hope. There really is.

It is too easy to blame all this on the crunch or on a change in City sentiment but its more fundamental than that. Reed Elsevier worked out there was no future in the old business publishing model and tried to ditch it. EMAP lost its way and broke itself up into bits, UBM effectively fired all its global CEOs (except in Asia I think), Stirling Media Group got saved by Progressive Media unable to sustain an independent existence any longer, Centaur got rid of some its longest serving and most loyal senior executives. Haymarket said goodbye to Nick Stimpson and others. Incisive Media, perhaps the success story of the last five years, announced layoffs and ousted Rory Brown amongst others.

The tales of reflex culling are too numerous to list. But what next? When the culling is over, when the redundancies are done, when the budgets have been slashed, the overheads expunged, what if the revenue keeps falling?

A parenting guru of my acquaintance told me that it was always wrong to smack an errant child. His reason? If it doesn't work, which it often doesn't, you are left with only two choices. Smack the child harder or think of another strategy. He argued, why not deploy the other strategy, the one you will have to get to when you realise that beating your child senseless will not change his behaviour (unless you want him cowered and snivelling), before starting on the smacking.

We have been smacking the arse of business media and our businesses all year. Many of us haven't finished yet. There will be more pain to come in 2009. But let us take the advice of my parenting guru and start to deploy the strategy that will save us from nurturing a cowering, frightened and clueless industry.

As you can probably tell - I am not having a good day.

Merry Christmas.

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UBM Updates on Trading

2008-12-12T09:44:00.004Z

Image via Wikipedia United Business Media has issued an update ahead of its year end results. The announcement claims that UBM has had its best year for six years but leads with the explanation that much of this is due to the strengthening of the dollar against the pound. This is not quantified in the statement so we cannot judge what is really happening in the underlying business.

I am always amused that public companies will argue that unfavourable exchange rate movements should be ignored when reviewing their results, but favourable movements are always cloaked in a perverse self congratulatory smugness. Spinning, is not confined to the world of politics.

The statement notes that some print products and events are struggling. Exhange rate or not, this is a rare almost good news story, only slightly blushed by the acknowledgement that 350 jobs are to go.

UBM is doing some interesting things. Their internal Wiki (see article below) is proving a useful tool for sharing knowledge around their organisation, they have taken the lead in "delayering" of management, expansion in to developing markets and have been succesfully weaning themselves off print dependency. However their share price, like everyone elses has tumbled this year and an exposure to exhibitions is by no means an insurance against a rough period to come.

What will Reed do With RBI Now?

2008-12-11T08:18:00.004Z

So that's it then. Reed Elsevier has "postponed" the sale of RBI for the "medium term". Since the disposal was announced last February the credit market has collapsed and so has the b2b media trading environment.

There has been no meaningful trade interest in RBI for months and now private equity buyers have proven to be very thin on the ground. The only deal on the table involved a deferred consideration and a low price. This would have left Reed exposed to a risk of not achieving even the depressed price the media has speculated. They wanted the cash from the sale to protect their credit rating and to pay down debt incurred following the acquisition of Choicepoint.

Reed will be kicking themselves that they did not get on with this disposal two years ago.

As the City digests the implications of this (even good international business media businesses are unsellable at almost any price) expect the pure play b2b public companies to endure a further beating on their share price.

What next for RBI? Clearly there is room for some substantial cost cutting. They should also be closing titles, downsizing the scale of the business and its overheads, re thinking how their magazine model works and run the place as if it were owned by private equity.

This will be very counter culture RBI management. They should plan that they have to exit their current shareholder in three years - just like a private equity manager would think. Exposing palpable shareholder value in such a short time period is not the same strategic approach as running a business as part of a long term position in a large corporate group.

The changes in thinking required are so fundamental that it would be wise to makes some management changes and to make them fast.

If I were Keith Jones (and for the record I am not), I would want to get such a plan written and in place before Ian Smith, the new Reed Elsevier CEO turns up. If I hadn't, I might expect a short career as global RBI CEO.

And then there were none

2008-12-10T16:33:00.003Z

The Guardian reports that Reed Elsevier has abandoned the sale of RBI although it intends to sell in the medium term.

The consequences of this are significant for us all. I'll post tomorrow with thoughts.

Black,Black Black, Black

2008-12-10T09:03:00.005Z

Paul Conley writes this visceral piece about the future of b2b. I make no apology for quoting from his summary,

"1. The B2B publishing industry -- which is now dominated by giant print companies and smaller Web-only companies -- is about to collapse.2. When the dust settles, B2B journalism will still be here -- but many of the companies that make up the industry will be gone.3. The dominant business models of both the past and present will fail."

The market has already decided this is so for many of the public companies. Centaur Media's share price hit a new all time low of 36p this morning, valuing it at around £50m - a third of its float price. They are not alone - just a bit ahead of the curve.

We have argued on this blog for some radical thinking to solve the problem but there is precious little evidence of anything other than cost cutting. When Steve Austin lost most his body parts in an accident the surgeons did not build the bionic man with an axe. The leaders of B2B companies cannot build a new model industry from the crash damaged cadavre of the old model with a cost axe either.

Just Rumours....

2008-12-10T08:04:00.005Z

A couple of rumours heard. Ocean Media, the owner of Inside Housing magazine and recently the subject of a buy out led by AAC Capital, is making redundancies.

Also heard is that Mike Danson, founder of Datamonitor (sold to Informa), who recently swept up SPG has been kicking the tyres of troubled Huveaux.

B2B Advertising Robust in a Downturn

2008-12-08T10:35:00.004Z

American Business Media, the US equivalent of the PPA is claiming that only a third of b2b marketeers are planning to cut their ad budget in 2009, 40% will hold steady and 30% will increase their spend.

Like the PPA, ABM has a vested interest in talking the market up so we treat this with scepticism I suppose.

The mathematical implication is that we should sign up to 09 budgets that are the same ad revenue as 2008 - and that just feels hopelessly optimistic.

Its a Bit of a Bain, but there is only one bidder left for RBI

2008-12-08T09:00:00.007Z

The Telegraph reports that only Bain Capital remains in the bid process for RBI at a bid of around £680m - around half the original price. The article also speculates that the proposed deal involves an earn out (ie deferred consideration) and a lock in for key executives.

As gifted as they are, the radical surgery and rethink needed in RBI is not best solved by managers who have been there 25 years. Earn outs are always messy and Reed Elsevier will be reluctant to tie themselves into future consideration over which they have no control.

Bain will consider that either they will have got RBI on the cheap, or by the time the earn out kicks in, the financial markets will be looser and raising funds will less of an issue.

I have no idea whether he is involved in the deal, but a Bain Consulting senior guy is one Graham Elton who was briefly CEO of Miller Freeman UK (now CMPi/United Business Media).

The odds of the deal closing are getting longer. There is every possibility of a withdraw before Christmas.

Deal or no deal, vicious cost cutting will follow rapidly in the new year.

B2B Online Could Go Ultra niche

2008-12-05T07:49:00.009Z

A US review of research by Technorati, the blog search engine, claims that most Blogs carry advertising and that average revenue/year is $6000 with some of the uber blogs making $75000 a year.

The numbers are small, but growing fast. This blog, which has a mostly UK audience is much smaller and makes next to nothing from advertising. In part this is because the Google ads are often not very relevant to this very specialist audience.

As regional newspapers wrestle with the concept of ultra local advertising, is there an opportunity in b2b to learn something from this approach and to create a network of business to business specialist blogs and micro sites where the ads are sold on a "classified" model? Advertisers can match their advertising to the audience and select which blogs they wish to appear on. This opens up access to highly relevant audiences not normally available. How would you reach the audience of this blog otherwise? I don't sell ads and the Google system is not sufficently targeted for this specialist group. Only a handful of sites and blogs write about the UK B2B sector and certainly none mainstream media portals bother much with it. And yet, small though it is, there are many suppliers to our industry who would happily pay to reach you. (In case you didn't know most of you are pretty grown up execs in the b2b industry.)

Let's call this B2B idea "Ultra Niche".

The advertising is highly targeted, inexpensive and very effective. It encourages the growth of specialist writing and offers great ROI for advertisers at a low cost. It's a credit crunching idea!

In a larger way Federated Media has built a substantial business in the US using a variation of this thought.

Mmmm.

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