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Saturday, July 15, 2006

Comedians and "Penron" 

A commentator to my recent post on the Penton sale possibility, signing himself "Nussbum," asks the question: "Penron?"

Normally, I'd simply delete a comment like that, but the more I thought about it, the more I felt the need to respond.

My comedian-commentator may have coined a neat little term for what's happening at Penton, but I think it's wrong. Sure, the preferred shareholders stand to be made whole, with a nice profit, if a sale is completed. And sure, the common shareholders (of which I am one) are looking at the very short end of the stick.

But Penton is no Enron. Many of us applauded the company's efforts to remake itself from a "smokestack industry" publisher into an Internet player, back in the days when that seemed to make a lot of sense. So we bought shares, anticipating ludicrous payouts. And many more of us lost money, not only on Penton, but on other Internet-bubble related stocks--mainly because we helped create that same bubble through our expectations of instant wealth.

It's easy in hindsight to condemn the Penton strategy, but at the time, we all know we thought it was a good, if not brilliant, approach. And unlike Enron, the company wasn't using smoke and mirrors to create value--it was buying legitimate companies and executing on a legitimate strategy.

And it's easy to condemn the deal the preferred shareholders have. But as I recall, they stepped in with substantial capital at a time when Penton's very existence was in doubt. Sure, I'd like to pull some money back out of Penton in a sale--and I think the preferred shareholders will do the right thing by common shareholders in the end--but I took the risk, and held the shares.

And finally, I'd like to point out to "Nussbum" that Penton CEO David Nussbaum has done what looks like a pretty terrific job of resuscitating the operating elements of the company. Sure, the crushing debt load is still crushing, and the company's performance isn't going to be able to dramatically reduce that debt anytime soon. But within the tight confines of being able to make no mistakes, Nussbaum and his team have stabilized the financial performance of Penton, and that's no small feat.

None of this is to say that I'm particularly happy with the potential sale of Penton, and it's potential to cause further erosion in the Shaw family net worth (though not all that much, thankfully). But I bought in and stayed in with my eyes wide open.

If you have a different view, feel free to comment away!

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The Problem With Honesty 

UK Media giant EMAP's shares fell 13.4% after noting that revenue may "be marginally down for the first half." This is one of the reasons I dislike the public markets. Your damned if you're too optimistic (or lie), and probably damned more if you're truthful.

On the good news front, though:

In B2B, excluding public sector recruitment which has declined more rapidly than anticipated, there have been some good performances, with events and information businesses continue to deliver strong underlying growth. Recent additions to the B2B stable, in particular WGSN, continue to perform ahead of plan.

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Wednesday, July 12, 2006

Kudos to Alex DeBarr 

Naylor Appoints Alex DeBarr as its new President and CEO

Here's an executive move from a month and a half ago that I managed to miss. Alex DeBarr, friend and former colleague of mine from Advanstar, became President and CEO of Naylor in May. DeBarr was formerly Executive VP at Advanstar.

Naylor's a custom publisher targeting the association market (with 415 association customers), and is owned by Clarity Partners and ZelnickMedia, who acquired the company in August 2005 for more than $50 million.

Alex is a quality guy, and I'm sure his presence is being missed at Advanstar. Here's a piece from gainesville.com on Alex's move.

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Folio: Penton For Sale 

Tony Silber and Matt Kinsman report that Penton is looking at a possible sale of the company, having retained Credit Suisse Securities.

Tony and Matt have a detailed look at how common shareholders will be "compensated" if a sale occurs. It looks predictably grim.

Grab:

A special independent committee of the board was appointed to represent the common shareholders. None of the three committee members, interestingly, own any common shares of stock.

Great reporting from Folio:, as usual.

Here's the Penton press release.

My previous takes on Penton's valuation can be found here:

Valuing Penton

Penton's 2005 Results

And Rafat Ali's reporting, here.

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Tuesday, July 11, 2006

News Story Half Life: 36 hours or 1 year? 

Study: Most News Articles Have Online Half-Life of 36 Hours

I thought this piece from Editor & Publisher had some interesting relevance--it cites a study that found that a typical news story online is read by half its final reader total within 36 hours.

Then I researched the study and found that it's been online for over a year (though its publication date is June of this year--I guess academic journals run on a pretty different news cycle.

Even so, the half-life readership model of news is an interesting one, and speaks to the fleeting nature of the news story, and perhaps to the importance of features and analysis--a particular specialty of most b2b publications--and which I assume to have a far greater half-life.

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Miscellaneous Doings in B2B 

Since I'm so far behind on blogging, I thought I'd catch up on a few acquisition items of interest from the past few weeks.

VNU
First off, VNU is now fully private, having delisted its shares from the Amsterdam Stock Exchange. The company is also beginning the process of loading on debt--potentially more than $5 billion, depending on how the credit facility is used.

VNU also added Radio & Records to its Billboard portfolio. R&R has been on the market for ages, so I count this as a tiny add-on deal, and no real indication of the effect of the new owners. We have yet to hear how the management structure of VNU is going to shake out, anyway.

United Business Media
United Business Media acquired Commonwealth Business Media for $152 million. Commonwealth is a major trade, transportation and logistics media company whose key brand is The Journal of Commerce. The Times of London provided this analysis:

Analysts have also welcomed the price paid, saying UBM is consistently careful not to overpay. The group said yesterday that the acquisition is expected to meet UBM’s 8 per cent after-tax cost of capital criterion in 2007.

In the past few months, UBM also added Cable Digital News to its Light Reading properties for $300k.

New B2B Company
Richard Reiff, who left the president's post at Cygnus, has formed Advantage Business Media with an initial acquisition of Reed Business Information's New Products division, with revenues "north of $50 million," according to BtoB. Properties include: CED, Bioscience Technology, Chem.info, Drug Discovery & Development, ECN, EITD (Electronic Industry Telephone Directory), Food Manufacturing, Genomics & Proteomics, Industrial Maintenance & Plant Operation, Laboratory Equipment, Manufacturing.net, Medical Design Technology, Pharmaceutical Processing, Product Design & Development, Production Technology News, R&D Research & Development, ReedLink, Scientific Computing, Surgical Products, Wireless Design & Development, and Wireless Week.

While I always love to see new b2b media companies entering the mix, and fully believe that large portfolio companies like Reed (or VNU or UBM) go through cyclical periods of acquisition and then divestiture, this particular deal reminds me a lot of Questex, which bought a chunk of business from Advanstar and then has promptly struggled to breathe life into products somewhat past their heyday. Hope I'm wrong with this comparison, and wish Reiff and his partners all the best.

Other News
Eli Research, a company I hadn't heard of previously, is on the acquisition trail.

Grand View Media, which is owned by the folks at EBSCO Industries, acquired NTP Media.

And Simmons-Boardman acquired Davison Publishing Co.

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