Hanley Wood Faces Down Housing Market
"To most, launching a new magazine right now might seem counterintuitive, but to us, we believe there is still strength in the housing market, in green building,â€ť Hanley Wood CEO Frank Anton tells Folio:, â€śThe housing market is hurting right now, but it will recover. We believe that titles or shows that we launch and properties that we might buy will perform incredibly well once the recession is over.â€ť
In 1981, company founders Michael Hanley and Michael Wood purchased Builder magazineâ€”what turned out to be their flagship titleâ€”during the lowest point in the housing industry since the Great Depression, Anton explains. In 1991, during what might have been the second lowest point in the market, the company launched a number of new magazines. â€śThe point here is that our strategy is to take advantage of down markets,â€ť says Anton. â€śThe competition tends to bury its head in the sand and tries to wait out a recession. Weâ€™ve chosen to be aggressive and itâ€™s worked well for us.â€ť
While Hanley Woodâ€™s year-to-date revenues are only slightly ahead of last yearâ€™sâ€”showing only low single digit gainsâ€”Anton points out that only 40 percent of the companyâ€™s revenue is tied to print and online advertising. â€śA lot of people forget is that we donâ€™t just publish magazines, and donâ€™t just publish magazines about the housing industry,â€ť he says. â€śOur trade show business was very successful this year, with revenue and earnings well into the double digits. Our magazines in the commercial construction space, including a magazine we launched last year, have performed strongly, which helped offset the relative weakness of the magazine we have in residential construction.â€ť
Hanley Wood, like most publishers, has invested a significant amount of money in online. This year, the company spent about $2 million in staff expenses and $1 million on a new CMS. If Hanley Wood had not invested in its online initiatives, its year-to-date earnings would be up 5 to 6 percent, Anton says.
With the housing market down (about 40 percent from its peak, Anton notes), should Hanley Wood consider diversifying into other markets? No, says Anton. â€śWe donâ€™t see that the broadly based diversification strategy has served most of the large business to business media companies very well over the last 10 years,â€ť he says. â€śFrom what weâ€™ve seen, the most highly diversified companies have tended to be poor to mediocre performers.â€ť
Looking forward, Anton expects Hanley Wood to continue its aggressive business strategy, despite what direction the housing market turns. Right now, the company is considering a major magazine launch and three or four additional magazine/event-related acquisitions. â€śThe prices that weâ€™re paying now are more affordable than they would be if the housing market was roaring along,â€ť he says. â€śIn a lot of ways, this is a good time to buy.â€ť
â€śWeâ€™re not just thinking about right now, today,â€ť Anton adds. â€śBy remaining aggressive, it puts us in much better shape when the recession ends to capture greater share and to grow the business more rapidly than we otherwise could. Weâ€™re thinking about 2009, 2010, 2011.â€ť