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Monday, May 23, 2005

Penton: Secularity 

You learn something new every day. Because of my client, Religion News Service, I've tended to define secular in a certain way, as in: RNS is the only secular news service which covers religion and ethics exclusively. But after combing through Penton's recent SEC filings, I found a different meaning for the word. As in:

Referring to long-term changes that take place slowly and imperceptibly. Commonly used to describe changes in elevation, tilt, and stress or strain rates that are related to long-term tectonic deformation. For example, a mountain that is growing is getting taller so slowly that we cannot see it happen, but if we were to measure the elevation one year and then the next, we could see that it has grown taller. (From the US Geological Survey.)

Here's Penton's use of the word with this type of meaning (from the company's Penton's 10Q-A, for the First Quarter 2004--refiled recently.) I quote it at length, because I think it's a great definition of what we in b2b media face.

The continuing decline in print advertising pages across a broad range of business-to-business markets appears to be tied to the combination of the historical lag of advertising recovery and the secular changes that are occurring in our industry. While it is historically consistent for advertising recovery to lag the recovery of underlying end-markets, we are likely experiencing a structural change in how our customers are allocating their marketing budgets even as their business conditions improve.

While the secular changes vary by market and are not consistently applied across all sectors, we are witnessing increasing adoption of electronic marketing programs that include search engine advertising, as well as custom marketing programs including events and print products. The changing marketing strategies of our customers continue to impact print advertising budgets in several sectors.

The adoption of non-traditional media channels seems to be driven by a combination of sales lead generation goals and marketing accountability in several markets. Brand building and new product introductions, long the strength of print advertising programs, are not the primary marketing strategies for many of our customers at this point in the economic cycle.

In sectors where brands continue to be the primary focus of marketing plans, such as foodservice and retail, print advertising continues to be the foundation of marketing programs. As customers in other sectors return to brand building and introduction of new products, it is likely that print advertising will recover. However, it is also likely that print advertising recovery will lag the overall growth in our customers’ total marketing budgets.

Some further notes, from Penton's three months ended March 31, 2005:

The Company had approximately 812 record holders of its common stock on March 31, 2005. [Disclosure: I'm one of the elect, looking for salvation or a nice cup of joe on the valuation of my holdings]


If the Company had been sold on March 31, 2005, the bondholders would have been entitled to receive $330.3 million and the preferred stockholders would have been entitled to receive $154.2 million before the common stockholders would have received any amounts for their common shares. The amount the preferred stockholders would be entitled to receive could increase significantly in the future under certain circumstances. Common stockholders are urged to read the terms of the preferred stock carefully.

Given a Consolidated Adjusted 2004 EBITDA $33 million and a generous 10x multiple, my shares are worth...oops! Guess I'll have to wait for that cup of coffee.


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