ABM Panel: Media Matters in Asset Mix Valuations
Data and marketing services are M&A flashpoints, but well-integrated media products make a difference.
Washington, D.C.—The SIIA held its combined ABM & Information Industry Summit here this week and data, organizational structure and M&A were big themes in the programming. A Monday panel on M&A revealed that media still figures heavily in publisher valuations, despite the laser focus on data and marketing services capabilities.
Lead by moderator Jonathan Knee, senior managing director at Evercore, panelists talked about how companies are valued based on asset mix. At the end of the discussion, Knee asked the panel how valuable a "portfolio of media" really is, given how much some companies are detouring into new revenue streams.
"Technology has made it possible to have actual connections between multiple media, but in some cases it feels like people are putting two things together that don't have much to do with each other," he said. "Is [having multiple media] a coherent operating story rather than a sexy marketing story?"
Peter Goldstone, CEO of Hanley Wood, used his own company's asset mix as an example of how media, print and digital, is an important component in the overall portfolio—and it's valuable to remember, in the context of his comments, how much strategic importance Hanley Wood has put on its data services division lately, which grew out of its 2013 acquisition of Metrostudy.
"It's clear to me we need to be completely integrated with our customer," he said "We rarely go to agencies. We don't just want to play in the data bucket or the marketing services bucket. We come up with a story that helps our customers grow. Our business wouldn't work if we weren't completely integrated. That starts with data, and our media and marketing services capabilities help activate. Data is the connective tissue. Our sales are completely integrated."
However, Goldstone pointed out an important distinction: "Our advantage is we play in one market, not many markets like some other publishers."
Knee next turned to Bill Chisholm, managing director at Palo Alto-based Symphony Technology Group, which just sold off the media assets, including Architectural Record, from Dodge Data & Analytics (formerly McGraw Hill Construction) to BNP Media.
"The reality is those businesses were not integrated at all," Chisholm said. "Frankly, I think we could have headed in that direction, but pure media is not something we understood very well and we liked the leveragability of the data business. We just wanted to create focus."
Michael Struble, a partner at Wasserstein & Co., which, along with MidOcean Partners, owns Penton, re-emphasized the importance of connecting media to data to unlock more value.
"We've actually used the legacy business as a way to move into the data business," he said. "As we looked at the content so much of it had pieces of data, it just had to be packaged differently. Over time you can create some pretty compelling data propositions for your customers. We firmly believe in what Peter was saying—having an end-to-end solution. The need of those services from customers is only growing. Leveraging that content set or that audience set via marketing services has been a great way to extract more value."
Adding to that, Tony Salewski, managing director at Genstar Capital, said some private equity firms may not always understand media specifically, but they get how the whole is greater than the parts: "One of the funny things about private equity firms that don't focus on it is they don't understand media, publications and events. But they do understand the end market and data. The end market needs a suite of solutions."
Whether that suite is valued as a whole or separately depends on the buyer, said the panel. "With Dodge, we looked at the businesses separately and how they worked together—or didn't—and then spit out the multiple at the bottom," said Chisholm.
"If the media reinforces the parts then we won't break it down," added Salewski. "Everything we're doing in the media business is self-reinforcing."