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 discussion that was the morning’s most lively element. Rankine, serving as moderator, asked panelists how confident they were in the growth projections. “If you’re showing 6 percent growth with the collapse of the IT event business, then the numbers are conservative,” Pazour said. Added Stevenson, referring to a region where the growth is projected to hit 20 percent, “I don’t know about the rest of you, but I’m getting on the next plane for the Middle East.”
1105’s Vitale offered a note of caution. “To treat the industry as whole misses the point,” he said. “It’s really the type of activity and a market-by-market analysis.”
When the conversation moved to international markets and which presented the most challenges, UBM’s Kerr outlined conditions in the Middle East, India and China, and added that he avoids “the PIGS—Portugal, Italy, Greece and Spain.”
Stevenson, describing the business in Russia, said, “Things that you worry about in the trade-show business, there is a whole other level of things that you worry about in doing business over there. Transparency is not the watchword.”
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.”
Exhibition Market by Growth Forecast, 2008-2011
SOURCES: AMR International, VSS, AUMA, CEIR Index, BSG Asia Report, UFI, Fondazione Fiera Milano, Salon et Foires