BtoB Media Business - September 2011 - (Page 8)

M&A OUTLOOK From reeling to dealing B-to-b media looks to rebound from a rough first half with M&A activity focused on extending portfolios beyond print By Sean Callahan ver the past three years, there were many warning signs about the downside of acquiring b-to-b media companies. These warning signs had names—like Advanstar Communications, Cygnus Business Media, Penton Media, Questex Media and Summit Business Media. ¶ These companies, all of which had been acquired by private equity firms, underwent financial restructuring of their debt in the wake of the recession that started in 2008. Those reorganizations were more than enough to give a potential buyer of b-tob media some serious pause. O It didn’t help that even media companies with healthy balance sheets saw print ad pages drop by about 30% in 2009. As the entire industry scrambled for a new business model that was less reliant on print, the M&A market became moribund. Even as other media sectors saw M&A activity surge in the first half of the year, media investment bank Jordan, Edmiston Group called the b-to-b media deal flow “uneventful.” The number of deals plunged from 23 in the first half of 2010 to eight in the first six months of this year, while the deal value plummeted 74% to $23 million, according to Jordan, Edmiston figures. But the market in b-to-b media and information appears to be staging a secondhalf comeback. “I don’t think it’s another gold rush like we had a couple of years ago,” said Ed Fitzelle, managing director at Whitestone Communications. “I think you’re going to see a lot more deals based again on a fundamental value proposition and based on the idea of strategically adding another facet to your business to get more revenue from the same market.” Here is a cross-section of b-to-b media deals, from the blockbuster to the modest, announced in the past few weeks: ■ Bloomberg L.P. acquired Bureau of National Affairs, a provider of paid content to legal, government and business markets, for $990 million. ■ Providence Equity Partners backed Charles McCurdy in acquiring trade show producer George Little Management for $173 million from Daily Mail and General Trust. ■ Ziff Davis Inc. acquired Focus Research, a provider of research to enterprise technology buyers and leads to IT vendors. (The acquired company has been renamed Ziff Davis B2B Focus.) ■ 1105 Media purchased the School & College Building Expo from JD Events. ■ Penton Media acquired Nine Lives Media, an online media company that covers the tech channel. ■ OutputLinks Communications Group bought American Printer a few days after Penton announced it was shuttering the brand. (Financial terms of the Focus Research, School & College Building Expo, Nine Lives Media and American Printer deals were not disclosed.) Industry observers said the variety of these deals showed a renewed confidence in b-to-b media of all kinds (with the possible exception of advertising-supported print media), despite the continued difficulty in finding credit to complete acquisitions and the looming potential of another recession. The value of Bloomberg’s deal for BNA, which publishes subscription newsletters such as the Daily Tax Report and Daily Labor Report, shows the premium placed on paid content, which is viewed as the top of the food chain in business media and information. Bloomberg, which rarely makes acquisitions, described its deal for BNA, which had revenue of $331 million in 2010, as a “rare strategic opportunity.” Providence Equity’s and McCurdy’s deal for GLM shows a faith in a new kind of b-to-b media company, one built primarily around trade shows rather than publications. McCurdy previously ran Canon Communications, which generated the lion’s share of its revenue from trade shows and which was sold to United Business Media for $287 million last year. Industry observers are buoyed by McCurdy’s quick return to b-to-b media. “It’s another example of someone willing to invest in the future, showing he has confidence in the market and a vision,” Whitestone’s Fitzelle said. 1105 Media made a similar, if smaller, investment in events with its purchase of School & College Building Expo. The deal is a reflection of how many b-to-b media companies are transforming their businesses. In 1105 Media’s case, the company is reducing its reliance on print and investing in digital and face-to-face media. “We’d like to get to the point where events are the largest percentage [of our revenue],” 1105 Media President-CEO Neal Vitale said. “I’d like to see events be half of our revenue.” Currently, events account for one-third of 1105 Media’s revenue. Ziff Davis’ acquisition of Focus Research is another indication of how the emphasis of b-to-b media has changed in recent years. The acquired company focuses on digital lead generation for marketers. The move to more digitally oriented products is viewed as extremely healthy 8 | Media Business | September 2011 | mediabusinessonline.com http://www.mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - September 2011

BtoB Media Business - September 2011
Table of Contents
Outsell report bodes well for b-to-b media
Companies plan for growth amid economic uncertainty
Dealmaking picks up, raising hopes of a comeback
Sales & Marketing
Events
Audience Development
Production
People
Benchmarks
How SourceMedia transformed its operations

BtoB Media Business - September 2011