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Friday, August 19, 2005

Blog Party 

InfoCommerce 2005 - The Working Conference for the Thinking Publisher

I'll be attending Russell Perkins' InfoCommerce 2005, November 6-8, 2005 in Philadelphia.

I'm excited to see my blog-friend Dave Jung on the agenda (for the full line up, click the link at the top of this post). I read his B2Blog regularly, and look forward to the opportunity to meet him face-to-face. If any other b2b bloggers, or readers of b2b blogs, are planning to attend, let me know. Maybe we can put together a small blog party.

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Floor CPMs for 3rd Party Ad Networks 

Why don't 3rd party ad networks take any risk? (or why the "floor CPM" is the future)

Jason Calacanis ponders the idea of setting CPM floors when working with 3rd party ad networks. His story of one ad rep's reaction is worth a read.

Grab: This all has me wondering, how did we get to the model that the publishers take all the risk? Said another way, what are these networks risking by signing up publishers?

Jason's post touches on the core of my concerns with the way Adsense works with publishers (at least, with small publishers like me and my clients).

On a related note, what do you think Google is going to do with the $4 billion it plans to raise? For the New York Times' take, see here.

Grab: With perhaps $7 billion in cash, Google could also consider acquisition of a media or digital content company, analysts said.

As the story points out, Google has made good use of the "acqhire," Rex Hammock's pithy term for a hire hidden within an acquisition. But the $7 billion will probably be used for more than that.

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Thursday, August 18, 2005

Questex EBITDA Multiple, and More 

Advanstar, which held its Q2 earnings call today, posted a PowerPoint slide in which it calculates Questex's revenues and EBITDA at the time of sale, and derives a 9.3x multiple. You can see the slide here. It would be interesting to know, at the end of the year, whether that multiple has grown for the buyer.

There were some other interesting things noted during the call. CEO Joe Loggia noted that the MAGIC show, to be held in two weeks, is tracking ahead of last year in number of exhibitors, square footage and attendee registration. That's got to be good news, given the size and importance of MAGIC to Advanstar and its earnings.

He also said, related to the possible sale of the company, that "no final decision has been made."

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Advanstar's Q2 Results 

Second quarter results for Advanstar have been posted here.

Interesting factoids:

* Advanstar used portions of the proceeds of the sale to Questex to retire about 25% of its debt. That makes sense, but leaves Advanstar in about the same position debt-ratio-wise, since they also sold off about 25% of their revenues.

* Q2 revenues for the remainder of Advanstar declined about .4% year-over-year, due to softness in its Life Sciences Group, but are up 3.3% when comparing the first six months of 2005 to the first six months of 2004.

* Questex looks to have some challenges facing it. According to Advanstar, the revenues from the properties it sold to Questex for the first six months of this year were $49 million, compared to $57 million for the first six months of 2004 (-14%).

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A Digital Edition With Video 

A recent e-newsletter from digital edition provider Texterity accomplished several things. First, it got me to read the linked articles, especially the piece showing examples of print ads which promote the availability of digital editions, and then it got me back to the Texterity website, where I came across a sample of Advertising Age's Cable 2005.

I like this one a lot. First, Texterity requires no downloads, and navigation is easy. Second, the Ad Age folks thoughtfully provide a quick guide to their digital edition. And third, Cable 2005 features six pieces of promotional/advertising video. (As you'll see, Cable 2005 is an advertising piece, with a page of text, including programming schedule, and an ad for each ad-supported cable network who participated.)

It's very cool, and had me thinking of various ways that b2b publishers could add video and audio clips to support the text and graphics of their digital editions. In addition to selling video and audio ads, it would be great to see video of roundtable interviews and conference speakers. How about video clips of the editors commenting on the content, and providing even more perspective?

All of which would go a long way to building a very immersive digital experience.

If you happen to know of other digital editions that have embedded video (or audio), please let me know.

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Wednesday, August 17, 2005

28 Cents an Hour 

Veronis Suhler Stevenson's annual Communications Industry Forecast has been released, and you can read a summary of its contents here. You can buy a copy, or individual chapters, here.

There are a number of interesting predictions in the Forecast, but I usually focus on one area, media usage, since consumer time and attention is the greatest competitor we in b2b media have. If we can't command the eyeballs, we aren't going to get paid.

In noodling over the numbers, it's also apparent that media in general is a good value.

[My friend Rex Hammock often notes the disasters that occur when journalists wrestle with statistics, but herewith my own small contribution to "dis-stat-ster."]

The VSS Forecast predicts that by 2009, the average person will be using media 9.73 hours per day, and spending $1,023.69 per year on that media. That works out to 28.8 cents an hour, which seems a pretty good value. (The Forecast makes a distinction between advertising-based media--commanding 54.9% of consumer time--and consumer-supported media--45.1% of consumer time--but I have some trouble with these numbers. When I watch ABC (ostensibly free and ad-supported), I still pay DirecTV for the privilege of getting a signal. So I'm using VSS's total numbers for media time and expense to derive the average per hour. Your results may vary.)

That 28.8 cents an hour will work out to $88.7 million per media hour spent by all Americans (projected population of 308 million in 2009, according to the US Census), or $863 million per "media day." Not a bad take from the consumer side. And this doesn't account for advertising revenues generated alongside that consumer payment.

All very interesting, for averages.

Here are some of the Shaw family's current media consumption costs, by hour, based on estimates of our usage. We're a family of four, with two young kids, so I've divided these down to get a per-person, per-hour cost, where it makes sense.

Internet/Broadband: 3.5 cents
Television: 20 cents
Magazines: 31 cents (We're a pretty magazine-oriented family--even the kids have their own subscriptions)
Newspaper: $1.07 (divided by two, instead of four)
DVD Viewing, per DVD: $2
Theatrical Movie, per movie: $3.50 (not including soda and popcorn)

For us, good media value is created by the amount of time we spend on each activity. Our Internet/Broadband costs aren't cheap, but look that way on a per-hour basis. And our television costs could be cheaper per hour, if we watched more of it (I used five hours per day for the family as a whole, which is about right for us.) Don't get me started on the cost of taking the family to a movie theater--$68, last time we went, all inclusive, which has caused us to look more closely at our pay-per-view options.

Of course, I'm positing value on the basis of lowest cost, as opposed to the true value we derive based on the quality of the entertainment, information and knowledge we consume. The time I spend with newspapers is far more valuable to me than the time I spend watching television, in this sense, though it costs more.

And it's this true value that will determine which eyeballs migrate to which mediums.

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Tuesday, August 16, 2005

Global Sources 

Global Sources

I've spent some time recently thinking about China, especially the wild-west frontier of licensing content to that market for a client of ours. Not for the faint of heart, or light of wallet.

Everyone in b2b media is thinking about China (as is everyone in business). Yesterday, I commented on the Penton/CMP/Global Sources alliance.

I've spent a little time researching Global Sources, which looks to be a fascinating company. Publicly-traded (NASDAQ), and Hong Kong-based, Global Sources calls itself "a leading business-to-business (B2B) media company and a primary facilitator of two-way trade with Greater China. It provides sourcing information to volume buyers and integrated marketing services to suppliers."

The company delivers magazines, trade shows, online marketplaces, catalogs and more, all focused on the sourcing business. And it seems to be leveraging its history and position with select joint ventures and partnerships with US-based media and online companies.

Click the link above to learn more. And to stay apprised of doings in the Asian business media market, make sure you bookmark Paul Woodward's fine blog. See, for example, this post on Global Source's Q2 results, the impact of the adjusted exchange rates of the Yuan, and Global Source's alliance with eBay.

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Wasserstein's Big Deals 

Seven years ago, I plowed through Bruce Wasserstein's big book, Big Deal, eager to learn more about the man behind a company (Wasserstein Perella, at the time) I had encountered during a series of management presentations related to the sale of a company I worked for. In the book's introduction, Wasserstein talked about what he called the Five Pistons which drive the merger process: "They are regulatory and political reform, technological change, fluctuations in financial markets, the role of leadership, and the tension between scale and focus."

It's this latter piston that's worth thinking about when considering Wasserstein's b2b investments, including the still-to-close deal to buy Primedia Business (which will be known as PBI Media):

"Scale matters, and bigger seems to mean better to most managers. Maybe it's critical mass, or technology and globalization, or integration, or sheer vanity and ego, but there is a natural imperative toward scale. However, just as some companies keep getting bigger, others shed their skin and become smaller. The imperative toward focus and simplicity is as strong as that for size. The two competing elements create a vortex for change."

The Primedia Business acquisition is a prime example of this vortex. Primedia itself is shedding skin and becoming smaller and more focused on the special-interest market. And Wasserstein is doing...what?

Wasserstein's b2b media investments are varied: ALM (formerly American Lawyer Media), The Deal, a piece of Hanley-Wood (as a good friend of mine pointed out, most people seem to have missed the fact that Wasserstein & Co. is also an investor in that transaction), and now the varied markets and properties of Primedia Business.

Primedia Business is the odd piece in this puzzle. ALM has a laser focus on the legal market, and dominates it with high quality products. (Though it should be noted that the company's recent rebranding has opened that focus to "real-time news, industry trends and market intelligence at the crossroads of law, business and real estate.") The same focus exists at The Deal (which produces the most literate b2b magazine about M&A I've ever had the pleasure of reading), and of course, in Hanley-Wood.

So how to make sense of the Primedia Business transaction? The EBITDA multiple seems high compared to the products and their ability to grow. Many of the products suffer the same legacy issues that haunted Advanstar. And as many in the consumer business press have pointed out (see the Forbes link below, for an example), Primedia Business has a lot of "bizarre" titles and markets--though they all seem pretty typically b2b to me.

My friend Richard Mead, quoted in Forbes (worth reading the whole article), "sees Wasserstein cutting more deals 'to make sense of the Primedia acquisition.'"

Could we see, among those deals, the sharing of management and resources with some of Wasserstein's other b2b investments? That's possible, but probably very complicated, given the different funds that have acquired elements of the Wasserstein portfolio (and the evident minority position in Hanley-Wood). But the market seems to have established the high water mark for b2b transactions at between the Hanley-Wood/JP Morgan price and the Advanstar/CSFB price, so getting too big doesn't make much sense in terms of ROI. And the IPO option seems an ever-more-distant possibility, given the performance of such stocks as Penton Media and Primedia.

So I come back to Wasserstein's fifth piston, the tension between size and simplicity. In order to make that tension work, Wasserstein will need to invest in Primedia Business' current products, potentially move a few relevant products to the management of other players in his portfolio, buy add-on properties for certain markets, and sell off properties in other markets. He'll need to use the vortex of change to re-create Primedia Business into something quite different than it is today (generating some IRR for his investors along the way).

If he doesn't, he'll end up getting stuck in the mire that legacy companies like Advanstar and Penton have occupied.

But you know what? Given the high regard in which I hold his other b2b investments, I'm going to bet that he succeeds.


For another view of the Wasserstein deal for Primedia, see Paul Conley's post from a week ago. The comments section is valuable as well, especially Doug Shore's.

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Monday, August 15, 2005

Penton Financials, And China, Too 

Penton Media 2nd Quarter Results

Things look a little better for Penton in its new 10-Q, but that $9.3 million in quarterly interest expense is still pretty daunting. While revenues have dipped, due to discontinued operations and timing shifts, and continued softness in the advertising segment, adjusted segment EBITDA for the first six months is up over $3 million compared to the prior year. Net loss has been cut almost in half. Online media revenues continue to gain year-over-year.

The only way out continues to be to grow, which Penton seems to be doing in bits and pieces, with a few small acquisitions, and a new China publishing alliance with eMedia Asia, which is a joint venture of CMP Media and Global Sources, to launch Electronic Design-China. A shout out to my old friend Tom Morgan, Director of Penton Media's Electronics OEM Group, for putting this deal together.

It's worth reading through the 10-Q, linked above.

Usual disclaimer: I own some Penton stock, on which I've lost some money (on paper).

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