The Global Media Weekly for executives and entrepreneurs

What next for Metropolis B2B?

The 27-year-old Metropolis Group publishes many of the UK’s best-known B2B brands. It is one of the UK companies which grew rapidly by acquiring legacy magazines from B2B publishers which had turned away from print.

In the 10 years since CEO Robert Marr joined from William Reed Business Media, Metropolis has paid some £35m to buy magazines, information services and events from the likes of Ascential, Centaur, RELX, Wilmington, and UBM.

The result of the spending spree is a portfolio of 40 brands including: Local Government Chronicle, New Civil Engineer, Construction News, Drapers, Nursing Times, Money Marketing, Architects’ Journal, Architectural Review, and Property Week. No fewer than six of its B2B brands were first published in the nineteenth century. The oldest, Local Government Chronicle, dates back to 1855.

In the 1990s heyday of B2B magazines, some 30 weeklies stuffed with jobs classifieds once accounted for 100% of the UK market’s profit. Metropolis now publishes one-third of those legendary brands – as print monthlies with revenue coming mostly from digital and events.

But that is only a part of the curiosity of the London-based publisher. It was founded by Jonathan Mills, an Oxford University politics graduate who saw an opportunity to publish pre-internet guide books containing money-saving coupons, with titles like “London for Less” and “New York for Less”.

It was the start of a twin-track career for Mills who, even then, was building a reputation as an investment fund manager, having been a consultant for Bain. The same year as he launched the Metropolis publisher, he co-founded Metropolis Capital, a high-performing fund which in 2021 has some $2.4bn under management – and boasts an annual return of 38%.

Inevitably, his publishing performance has been less spectacular. But, even allowing for the 2020 dip, this year’s expected revenue is a 55% increase on 2016 (not shown here):

EBITDA 6.7 1.27.8 7.4 7.7
Flashes & Flames estimates / UK filings

Metropolis had been able to capitalise on the low acquisition prices of print magazines. Its success – as an investment – can be judged by the fact that it was launched with capital in the tens of thousands of pounds, has self-funded more than 30 acquisitions, and has net cash currently of some £15m.

Today, it publishes in 16 vertical sectors and employs 400 people. Some 40% of revenue comes from 100 events, 25% from subscriptions, and 33% from digital and print advertising, content marketing and lead gen.

More than 80% of its business is in the UK. The company organises 100 events annually including the brilliant World Architectural Festival, attended by 1,000 architects and designers who compete for awards. Think Cannes Lions.

The ability to build a “normalised” £50m-revenue, consistently profitable company with minimal startup capital says something about the availability of low-priced acquisitions among print-centric brands. Metropolis makes no secret of its emphasis on M&A. A whole page on its web site outlines its buying strategy and the scale of companies in which it is most interested; it encourages would-be sellers to get in touch.

Metropolis has certainly done a lot more buying than launching. The company’s executives admit to having no pre-set preference on sectors: they’ll buy if the financials are right. By contrast, organic development has been mainly confined to ancillaries like conferences and awards, launched alongside existing brands.

It is not difficult to see the results of a strategy that depends so heavily on acquisitions. Even if you disregard the pandemic, the last five years have seen little overall growth in revenue or profit. And, while the company has not made any acquisitions since 2019, it has actually added a total of only £1m of profit since 2017 when it paid Ascential £23.5m for 11 magazines in its biggest deal. In the year before they were acquired, these magazines made £32.1m of revenue and £6.9m of EBITDA so we might assume that portfolio now accounts for a large majority of the Metropolis profit. And, although subscriptions revenue has actually increased by 20% in the past two years, the dependance on advertising/ sponsorship is an obvious vulnerability.

Acquisitions are unlikely to be the key to securing longterm growth: they get expensive, especially when your targets start to be companies that are more highly-valued than mere print magazines. It may be significant that Metropolis – which has consistently paid some 4-5 x EBITDA for acquisitions – has not bought anything for more than two years. Even before the pandemic, the company had clearly found itself unable to compete for exhibitions whose multiples were often double the Metropolis benchmark. The same will be true for subscriptions businesses.

Metropolis seems smaller than it should be. But it may be said to have shifted successfully from structural decline to low-growth. A real change from 10 years ago when its revenue was almost 70% from print ads and newsstand sales. However, many successful investors would judge the health of a company by the level of its organic growth. Apart from all else, acquisitions can add more value by creating the scope for organic development. That’s, of course, how premium-priced, targeted acquisitions can provide good value.

These are pivotal times for magazine-centric media.

The future success of many media brands will inevitably depend on their ability to produce exclusive “must have” content. As in consumer media, B2B audiences may always want “news” but they will, increasingly, pay only for unique content that they can’t get anywhere else. You can own data and insights, you can’t own the news.

In B2B markets, this can include statistics and indices on business activity, costs, prices, revenue, and people. And, of course, the Price Reporting Agencies (PRAs) which are now so highly valued by an increasing number of media companies. What can be better than producing the pricing information that companies need in order to trade? There are opportunities in many sectors to produce statistical information that would – over time – become invaluable for business audiences. That’s the opportunity (and the threat) for traditional B2B media.

It is notable that the world’s largest producer of PRAs (Argus Media) and Acuris’ Mergermarket M&A database were created by journalists. Many business journalists have access to the range of information which can help to develop high-value stats. Just this week – in an analysis of 763,887 Wall Street Journal articles published from 1984 to 2017 – researchers found that news coverage of particular topics predicts 25% of average fluctuations in stock market returns. There is data everywhere waiting to be discovered – and monetized.

So you might think that Metropolis needs to – and can – build a pipeline of, say, subscription launches. But the challenge is complicated by its 40 magazine-digital brands. B2B media companies which specialise in one or a few sectors may find it easier to diversify within a given vertical and to exploit everything from data to events and consulting.

That “narrow and deep” strategy may be more difficult for a company seemingly defined by its multitude of magazine-like brands that – for all we know – Metropolis might want to grow still wider. In the post-digital era of “specialisation”, this company seems to be out of step. But it has some powerful brands and could yet change the game by deciding, for example, to target acquisitions just in existing sectors which have the potential for “information ownership”.

You’d think that a smart investor like Jonathan Mills might want to start by taking his publishing company’s largest sectors – property and architecture – and digging deep to develop high-value data products and services. Way to go.

Metropolis Group