I know. I’m a bit odd. But I love ‘results season’.
Watching the results come through from the big media firms you get a unique perspective on how the industry is shaping up. They give you a pretty forensic view of markets, strategy and platforms. An overview you never usually get unless you’re employed directly in those firms.
In previous years I have covered the results of UBM, Informa and Reed Elsevier individually on this blog. This year I’ve been a bit busy building our new business - The Media Briefing - so it wasn’t until today that I got a chance to catch up and watch the board presentations to analysts.
Each year I try not to read analysts reports or look at share-price movements. I don’t claim to be a financial analyst. Instead I am far more interested in:
- How the strategy is presented
- What levels of confidence are the management team giving off
- Which parts of the business show opportunity or weakness
- Are there any wider industry trends being highlighted
After watching the webcasts this is my feeling about the health of the big three.
Reed were the first of the companies to release their results. You can view the full report and view the webcast here.
Reed have been through the wringer in recent years. Chief executives have come and gone. Reed Business Information has been up for sale and then not. The company has spent big to buy a ‘non-traditional’ media company – Choicepoint. There have been continual questions about Reed Exhibitions…
All of this has meant that the analyst presentations have been made very much on the back foot.
This year Erik Engstrom was able to put on a more confident show. You could almost see his relief.
Broadly the company’s results were fairly static year on year with a small growth in revenue and a small decline in profits. On the surface, stable.
But under the surface there are clearly some big issues. The main one seemed to be the weakness of the Lexis Nexis part of the business and the high level of investment required. The legal markets are obviously still struggling, the Westlaw platform seems to be taking market share and their profits were down 12%.
It was interesting that the Choicepoint part of the business had managed to grow margins from 24% at the time of aquisition to a staggering 38% now. At the same time Lexis Nexis margins were just 14%.
So, what I took away from the Reed presentation was a perception of a company still very much in transition. Choicepoint and the re-bound of the exhibition business were collectively masking some deep underlying problems in Lexis Nexis and the continual re-positioning of Reed Business Information.
Informa’s results felt more predictable. They are still benefitting from cost control measures implemented across the business – especially in the events field where it is easier for a conference and training company to quickly cut marginal events and overheads.
Overall Informa had flat revenues but a decent growth in profits. Peter Rigby and his management team projected confidence and an uncomplicated outlook for the business. Clearly there are still challenges – for renewals in academic markets and Datamonitor sales - but this is a company firmly looking forwards.
They will continue to focus on large events, geo-clone successful formats to new territories and move subscription products up the value chain.
A theme that came from the presentation was that Informa were concentrating on premium intelligence and increasingly looking at enterprise sales of subscription content. I hear this more and more from business media companies as they search for the ‘holy grail’ of data and ‘workflow’ based products. The move from providing information to intelligence…
All in all I felt that Informa were the strongest and most confident of the 3 companies. They announced unequivocally that they “would have a good 2011″ and that “interesting acquisition opportunities were opening up”. Their debt was under control and Adam Walker joked that for the first time in a long while the phrase “under-leveraged” had been used to describe them in an investor meeting.
We recently interviewed Peter Rigby on TheMediaBriefing and asked him what worried him most. His answer was geo-political risk and so I suppose that whilst the company seems strong he is keeping a close eye on events in the Middle East.
The UBM results yesterday (1 March) were the most intriguing. Last year I wrote about a company that was weathering the global storm pretty successfully. I suggested that they were transforming themselves steadily – and via a long stream of acquisitions - into an emerging markets exhibition company.
It’s pretty easy to understand the strategy here. Whatever is happening in individual business verticals it appears clear that the strength of growth over the next 10 years is going to come from the emerging economies of, in particular, the Asia Pacific and Indian sub-continent. Exhibitions are a market that really benefits from scale and by acting as a consolidator I thought UBM was putting itself in a good position.
A strategy of acquiring assets in these regions – as well as the Americas – seems sensible and David Levin has always impressed me as a no-nonsense leader of the business.
… looking at their analysts presentation today gave me some cause for concern. In spite of the company’s “fastest rate of revenue growth in a decade” their profits were flat. This was put down to an increasing investment in new products, sales and IT systems but I suspect it is much more than that.
There was an emphasis on ‘targeting, distribution and monitoring’ (PR Newswire) side of the business that I hadn’t seen before. I cannot see how the margins for this type of service are not going to be adversely affected by the easier distribution of information online and social media. In previous presentations I got the feeling that this service was not seen as core to UBM’s future.
Likewise the focus on virtual events and development of better marketing services with print and online platforms combining to generate leads for sponsors was different. I suspect that the old CMP business is really struggling.
There was also the announcement of the sale of The Publican (and some related brands) at what sounded a virtual fire sale price compared to the valuations it enjoyed relatively recently.
I suspect what has been happening at UBM is that everyone has been extremely busy running around acquiring and integrating businesses. I know from bitter experience what a time-consuming task this can be – especially in overseas markets – and it must have been a significant management distraction. One which wasn’t helped by the global downturn and writedown of the print portfolio.
UBM’s analyst presentation was by far the most confused of the three. It felt over-long and complicated. Sometimes less is more and the clear strategy that they had shown last year seemed to have been muddied.
David Levin also gave an exclusive interview to TheMediaBriefing in October last year in which he highlighted the fact that there would be inevitable ups and downs for the company. I can’t help but feel that UBM could do with a period of stability to really concentrate upon building a world-class emerging markets events business.
I admire the company and am a long-term shareholder but David’s assertion that the re-focus of the company was done had a bit of a hollow ring to it.