Greg Gerber posted on September 07, 2008 01:00
NEW YORK CITY -- The global events industry is huge, growing and highly fragmented. And, in a time of declining print revenue, it offers integrated media companies a highly profitable, defensible, Web-resistant platform for growth, according to a new white paper from DeSilva + Phillips and AMR International.
“This is the star of old media,” Denzil Rankine, CEO of AMR, said at an event Thursday at the Paley Center for Media in New York City, where the findings were presented.
The white paper, which focuses on the trade show and conference parts of the events business, describes a world where global revenue is $100 billion and the dominant monolithic player, Reed Exhibitions, holds no more than 7 percent of that total. It describes an industry with an average growth rate of 6.2 percent globally since 2003 and a growth forecast of 5.5 percent (4.2 percent in the United States) through 2011. Some areas, including the Midddle East, are projected to skyrocket.
Unlike virtually everywhere else in the media world, events-related M&A activity is expected to remain strong, the white paper indicates. “Despite overall reduced M&A activity, the events market seems to be holding its own and may in fact have another strong year of M&A,” it states. “Deal volume appears to be despite the fact that buyers are paying lower multiples due to financing constraints and a weaker overall market outlook.” The white paper outlines three companies with aggressive acquisition strategies in the events space, including DMG World Media, Canon Communications and Affinity Group, which went from three consumer events in 2005 to 45 events as of June.
Transaction multiples were healthy. D+P analyzed 149 event transactions since the first of 2005, and found an average revenue multiple of 2.4 times, and an average EBITDA multiple of 9.2 times. Also covered in the report are business models, ownership models, globalization and the effects of the Internet face-to-face.
‘Strong Shows Can Become Brands onto Themselves’
The event, attended by nearly 80 leaders in the magazine publishing, events, private-equity and financial markets, featured a six-person panel of media-industry executives. Panelists included: Neal Vitale, CEO of 1105 Media, Don Pazour, CEO of Access Intelligence, Mike Schneider, CEO of Affinity Group, Jeff Stevenson, co-CEO of Veronis Suhler Stevenson and Richard Kerr, head of group development for United Business Media.
The panel debated the ownership models and the pros and cons of the standalone approach—such as Reed—and the integrated-media approach. Stevenson said VSS has invested in both. “Both can be successful,” he said. “You tend to find more dominance in the market with the integrated model. Whether the decline of print makes the integrated approach less important is still an open question. Maybe print will become more of a promotional vehicle.”
Pazour said strong shows can become brands onto themselves, but the integrated approach offers the opportunity to leverage one to the benefit of the other. “It also helps you avoid boneheaded moves—Galen Poss of Hanley Wood describes it as, ‘The market went left and we kept going straight.’ With a magazine, you’re closer to the market and you can avoid that.”
SOURCE: Folio Magazine