Tag Archives: Results

United Business Media, Informa and Reed Elsevier results – the health of big B2B media?

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:

  1. How the strategy is presented
  2. What levels of confidence are the management team giving off
  3. Which parts of the business show opportunity or weakness
  4. 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.



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7 strategic questions business media leaders should be asking

Over the last few weeks a major swathe of the quoted business media companies have been reporting their results. While I have covered some of them on this blog I have not done so from the perspective of a financial analyst. Instead, I find it fascinating to see the leadership teams of these companies present their strategy for their businesses.

Individually these results presentations tell a lot about how an individual business is shaping up. What are the threats to their traditional markets? How are they making the transition to a digital future? How strong is the management team? etc. What gets more interesting though is when you aggregate these presentations and try to distil some key themes from them.

So here I would like to pull out 7 key questions that I believe business media companies should be asking themselves if they are to prepare themselves for the years ahead.

1) What business am I in?

Before any company starts down this road it is probably worth reviewing your company’s mission statements, goals and values.  The media landscape has changed radically in the past 5 years. It will change radically again in the next 5 but there should be some key underlying themes that remain true and consistent. Try to document in real language what your business is and, please, don’t just sit there waiting for things to return to the past *cough, recruitment revenue, Centaur results presentation*

2) What does my company do really well?

It’s all well and good to have many spokes to your wheel and a multi-platform strategy is sensible. However, underneath that each company should be able to easily identify their key strengths. What do you do better than your competitors? What is your key advantage as an organisation? Shouldn’t you be spending a lot more time trying to build on those strengths and add complementary offerings around those particular skills rather than worrying about areas where you are weaker?

3) In which markets do we own brands with ‘last-man standing’ advantage?

In the UBM results presentation David Levin spoke about the business media industry being ‘over-published’ in many key verticals. He was specifically talking about print products but we all know that strong media brands don’t work with only one channel. In which media markets do you have real strength? Where do you own real brands rather than just products? Concentrate on those and get out of the markets where you don’t – sell them quickly (there are still plenty of buyers..), close them or accept that you are running them for short-term cash.

4) What is our emerging markets strategy?

Healthy business media properties rely on underlying growth in the markets they serve. Geographically it is clear that the major growth in the world economy is likely to come from the developing rather than the developed world. What is your company doing to benefit from these markets? What operations or partnerships do you have in the BRIC countries (Brazil, Russia, India, China) and other growth economies?

5) What are we doing to move up the value chain of information in our chosen markets?

In all but the most specialist markets, news is becoming commoditised. Businesses that in the past have relied on charging for news are rapidly finding that their business models no longer work. If you want to stay in these market sectors what are you doing to move your content and services up the value chain? Where are you able to add data and analysis to your content mix? What about the development of workflow solutions and software products? It’s not easy and is no quick fix but a drive towards higher value and renewable revenue streams should obviously be a goal for all business media companies.

6) Is my business structured for the past or the future?

In the UBM presentation it was interesting to hear Levin talk about a significant re-engineering of management teams in the past year. Whilst modern media businesses clearly still need a lot of the skill sets they always have – content development,  relationship building and talent management – increasingly technology is playing a much bigger role. Do you have the right people in place? Are there bottle-necks in your structures? Are there people in charge of business units who are responsible for making decisions on areas in which they have little experience?

7) Can I explain my company strategy clearly, simply and believably?

A couple of the CEO’s who presented their results recently gave me very little confidence in their company’s future strategy. While you don’t have to be a great presenter to run a great business; you do have to be able to give confidence to your customers, investors and staff that you have a plan about where you are going and why.  After the recent turmoil in many media markets I’m not convinced that some companies have made up their minds.

Here are 7 questions.

Any others that you’d like to contribute? Please put in the comments below.

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United Business Media results – an emerging markets exhibition company

Today it was the turn of United Business Media (UBM) to release their results. I was expecting UBM to have been hit harder than most during the downturn – given their exposure to the events industry and tech magazine publishing in the US.

However, their overall numbers came in a lot better than analysts had expected and their share price received a significant bounce this morning as a result.

UBM’s CEO, David Levin gave a very confident and strong presentation this morning. He spoke a lot of sense explaining the nature of the business that he was trying to build and saying that the world had changed. He wanted analysts to stop looking to the past and instead to concentrate on where UBM was going.

A few highlights of his presentation for me were:

  • UBM’s biggest activity is in the events field but they are a very different business from Informa, who also released their numbers this week. Whereas Informa is largely a conferences business UBM is clearly exhibition led. It is important to understand the difference between the two. Large exhibitions businesses generally have significantly higher margins than conferences and benefit from greater forward visibility of earnings from stand re-bookings.
  • In spite of the global downturn UBM have been very actively developing their events portfolio in emerging markets. In 2009 the company generated 20% of group profits from activities in China and China was their largest single market. They have successfully made the jump that a lot of media businesses have tried to do away from declining, and more crowded, markets.
  • David pointed out client spend on stand bookings for exhibitions had been ‘rock solid’ during the past year. This made up c. 80% of their events revenues. The remaining 20% – sponsorship and attendee revenue – had been hit much harder. He showed some strong figures to back up these arguments although I do wonder about how successful their re-booking was in 2009 during the height of the market turmoil. Maybe there is more to come out here?
  • For their print publishing operations – the old core of UBM – David was very clear that many of their B2B markets were over-published. UBM had closed 31 titles over the past 12 months, seen revenues contract dramatically and cut a lot of costs. Whilst he argued that there was still a place for print in the mix David said that we would rapidly move to a situation of ‘the last man standing’ in individual verticals. Unless you were a leader, or strong number two in a market with good dynamics you were unlikely to prosper.
  • It was clear that there had been a significant overhaul of the divisional leadership at UBM. They explained that in the past they had a lot of media people making decisions on technology developments and inferred that they hadn’t been qualified to do so. Their emphasis over the past 18 months had been to bring in more people from a technology and web background to aid their evolution.

Overall, these were clearly a good set of results. UBM had managed to clear up some long-running tax issues, highlight the success of their acquisition policy, expand their operations in high growth markets and largely move away from the past. They are clearly prioritising  further opportunities in the exhibitions space and explained that this market was highly fragmented and ripe for further consolidation.

It will also be interesting to see what the lead player in the market – Reed Exhibitions – decides to do.

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Informa results reviewed positively

Another day, another results presentation. I aim to cover as many of these as I can on this blog and then post a review of overall sentiment sometime towards the end of this month.

Today it was the turn of Informa – who bill themselves as ‘global business information specialists‘. It’s an interesting group having grown following a merger of Lloyd’s List Publishing and IBC Conferences. Since then the company has been very acquisitive with Taylor & Francis, IIR and Datamonitor joining the stable alongside various smaller acquisitions.

Informa has scale:-

  • £1.2bn of revenues
  • an operating profit of £146m
  • 8,500 employees
  • 2,500 individual products spanning academic, professional and commercial markets
  • offices around the world
  • and they host around 8,000 conferences and training courses annually

as such Informa is a good barometer for the business media industry. So what do their results tell us?

On the surface their results seem fairly similar to all the media companies that have released results recently – tough markets, falling revenues, extensive cost savings, growing business in emerging economies, well positioned for the recovery etc… but it is only when you dig a little deeper (and listen to the company webcast) that you get the full flavour for what is going on.

Informa is a company with a good spread of activities and should have been better prepared than most as we entered the downturn. The thorn in their side has been that (along with many of the larger business media companies) it took on a lot of debt at an inopportune time – in their case for the acquisition of Datamonitor at the relative peak of the market. As such, there have been concerns over the past 18 months about covenant headroom and this has clearly placed pressure on the business.

That pressure now seems to have been relieved. Debt has been reduced by nearly £470m in the year and Adam Walker – the CFO – joked that it was lovely not to be talking about covenants this year.

On the business side Peter Rigby – CEO – stated that he felt the business was now ‘bumbling along the bottom’ in revenue terms. Informa had taken a lot of costs out of the group to protect margins in the downturn. They had cut around 2,500 of their smaller events and training courses and that had also led to significant head-count reductions. The remaining events portfolio had held up reasonably well, largely due to the performance of their largest conferences and exhibitions.

Peter pointed out that Informa’s top 200 events generate 28% of their events revenue but contribute 55% of the profits. As a result of cutting out the smaller events and associated variable costs the margins of their events business had been kept at 15% for the year. This was the cyclical area of Informa’s business that can change very rapidly when business confidence returns and corporate training / event attendance budgets are released.

Other highlights of the presentation were:

  • A star performance from the academic information side of the business – driven by a lot of new journal launches, better inventory management of their book stocks and an increasing use of ‘print on demand’ services.
  • Strong renewal rates on subscription information products – which are increasingly served online and delivered on a site licence basis
  • The investment in core products like Lloyd’s List – which had seen profits rise by 400% year-on-year and had launched a new Lloyd’s List Intelligence Service
  • The further integration of Datamonitor – taking advantage of the Informa global network of offices and a reduction in the cost base
  • Currency benefits from having US$ revenues significantly ahead of US$ costs

All in all a good set of results, delivered with confidence by the management team. Informa has a nice mix of businesses that give it both the stability of a strong subscription base and the ability, through their events portfolio, to rapidly take advantage of an upturn to grow profits.

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Thomson Reuters results

More results today – this time from Thomson Reuters.

On the surface they are fairly similar in trends to those of Reed Elsevier that I covered last week – pressure on headline revenues, significant cost cutting and highlighting the ‘late cycle’ nature of the business. However, when I listened to the results presentation this afternoon I came away with a very different perception of the business.

Whilst it is obviously a much larger business that Reed Elsevier, Tom Glocer and his team gave a very measured performance on their call. Their message was similar with the same period last year. There was stability and a consistent strategy of product investment for growth in the medium term.

Some of the things they highlighted were:

  • WestLawNext – Tom said that results were coming through well and that WestLaw had achieved it’s best sales in the last quarter since Q4 2007. He said that in a period of market difficulties that it was great for sales teams to have something new to sell. Since it launched earlier this year he claimed that 400 new sales had been secured in the first month and that he was confident of a significant uplift in market share.
  • Transition from print to online – In what sounded like a bit of dig at the competition Tom said that they had been slower than organisations like LexisNexis in transitioning products from print to online. He inferred that LexisNexis had made a mistake in abandoning print aggressively and early. He said that Thomson Reuters had ‘managed the transition without the chasms of profit drop out’ and that there were elements of their portfolio that remained better suited to print.
  • Utah – Thomson Reuters’ new standardised desktop platform was another example of the company’s investment. It was running a bit behind schedule but currently ‘in alpha’.

Overall, I took away  a lot more confidence in Thomson Reuters’ strategy than I did from the Reed Elsevier call last week. They obviously still have a lot of market pressures on various parts of their business but the positioning of the company for growth in 2011,2012 and beyond sounded believable and robust.

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Thoughts on the Reed Elsevier results presentation today

It’s results season again and one of the biggest business information companies have just announced their results this morning. Reed Elsevier are an organisation that have really gone through the mill over the past couple of years. Let’s remind ourselves of what has happened in this venerable company:

  • 3 Chief Executives – Sir Crispin Davis left this time last year to be replaced by a non-media man, Ian Smith. Ian lasted just 9 months and was replaced by Erik Engstrom the head of the Elsevier division.
  • 1 huge acquisition – Choicepoint at a relative high point in the market
  • 1 failed disposal – the Reed Business Information business was publicly put up for sale, then withdrawn from sale and now seems to be being sold off piecemeal
  • 1 major notes issue – to reduce debt after the acquisition of Choicepoint and failed sale of RBI

Torrid times for any company – even one with a solid range of defensive subscription income.

On the surface of things the results that they announced today seemed not too bad but having listened to their presentation webcast this morning it is easy to see why they have under-performed the sector by 30% since the start of the global downturn.

It is clear that the changing strategy in relation to RBI has been hugely damaging. A business that was already in severe structural decline was left rudderless during the prospective sale. It has then had to radically cut costs in the face of a collapse in revenues (18% down on the year). I would imagine that it has been a brutal time to work there and the continuing uncertainty of headcount reductions, closures and sales cannot be providing a great environment.

Even worse than the performance of RBI has been the downturn in the Reed Exhibitions markets. Here revenue is 22% down on the year which is not really surprising given that a lot of exhibiting companies would have been making re-booking decisions during the high-points of market uncertainty. Erik was keen to emphasise that the problems in exhibitions were cyclical rather than structural. This is partly true but once large companies have taken a decision to drop from major industry shows it is often hard to get them back.

Whilst the poor performance of RBI and RE had been flagged up and was expected, the real underlying concern I picked up from the presentation was the longer term worry about LexisNexis. It wasn’t stated but there seemed to be a general feeling from the Q&A that there were severe competitive pressures on the LexisNexis platform as a result of the Thomson Reuters investment in WestlawNext.  I suspect that this is causing them a lot more concern than they were letting on.

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Thomson Reuters results – singing from the same hymn sheet

Another day; another set of results. This time the Q4 results from Thomson Reuters which seem to be pretty robust.

You can listen to Tom Glocer on his investor call here but I wanted to highlight a couple of very similar comments to those heard in the Reed Elsevier call the other day (not direct quotes).

  • Thomson Reuters strategy remains to provide must have content and services on a subscription basis
  • Information that fits into the workflow of our customers is not a discretionary purchase
  • While renewals conversations with financial services customers can be difficult at the moment our sales teams have lots of tools in our toolchest that allow the end users to reduce costs and automate processes allowing lower headcounts in those organisations
  • We continue to invest at a time when others are cutting back – the new Westlaw platform is described on the call as a ‘game changer’ for legal information

Worth a listen.

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