Tag Archives: UBM

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.

But…

… 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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