Business success is all about timing. Of course. Predicting trends is almost worthless without a timescale. That’s why the debate has moved on from whether print will survive or not, to how it can be used to create a “runway” to a new longterm business. It’s also why the largest consumer magazine groups in each of the US and UK (Dotdash Meredith and Future Plc) are owned by very digital companies which understand the value of brands and communities. Many of those magazines are still soundly profitable with audiences which can fuel data-filled expansion in, say, e-commerce; others are potentially powerful platforms, despite revenue erosion.
In B2B media, things can be even more interesting because audiences frequently remain captivated by historic industry magazines long after the easy money has gone. Many print-centric B2B brands might out-live their B2C counterparts but they can also find it easier to transition to digital. They can become the perfect runway. But you wouldn’t guess it from the way that even strong print brands continue to be divested cheaply.
Among the best evidence that print has been over-sold is the UK’s fastest-growing B2B publisher, the £60m-revenue Mark Allen Group. The family-owned company has increased its revenue four times and EBITDA nearly 10 times in the last 10 years – fuelled by the acquisition of 23 mostly-print businesses for a total of about £54m, at an average price of 4 x EBITDA.
There’s another case study in Nashville, Tennessee, a city best known for its country music and also for being a world leader in the publishing of Bibles. In the last four years, Endeavor Business Media (EBM) has acquired no fewer than 22 B2B publishing companies including nine so far this year. It has paid some 2-5 x EBITDA for these companies including 86 print magazines. It will have $150m of revenue this year – up from $125m in 2021. With a 2022 run-rate of some $175m, revenue should exceed $200m next year, with an EBITDA margin of 20%. Given the pace of acquisitions, we may assume there are more deals underway. But, at this stage, EBM is set to make 2023 profit of at least $40m – a 3x multiple for the estimated $125m of debt-funded investment. It now employs more than 700 people.
The company was formed ago by Chris Ferrell, former CEO of SouthComm Communications, a local media business that had evolved from Village Voice-like “alt weeklies” to B2B magazines, before selling everything off and going out of business.
A 2004 announcement of Ferrell’s appointment as publisher of the Nashville Scene magazine paints the picture of someone “who has uniquely positioned himself at the nexus of business and technology, politics and religion in Nashville, a city where disparate social spheres overlap and interweave. A graduate of Furman University with a master’s in divinity from Vanderbilt, Ferrell is a lifelong Baptist—but he’s also been the honorary grand marshal of the city’s gay pride parade. He’s a businessman who voiced support for a living wage, and a council member who championed affordable housing before it was cool…in 1995 at the tender age of 26, Ferrell was the youngest person… elected to the metro council.”
He had worked for two internet companies, Telalink and CitySearch, run a marketing firm and a company providing performance improvement, customer service and management training for hospitals. The Nashville Scene loved the man it described as “a businessman and a preacher, a politician and an internet pioneer.”
Within a few years, Ferrell was CEO of SouthComm as it diversified into B2B magazines. He fell out over his determination to go all-in on B2B. He then acquired his former employer’s B2B magazines for Endeavor Business Media which he had formed with the Nashville-based Resolute Capital. That was in 2017. The following year, they acquired seven other companies, including Penwell energy publications divested by trade show organiser Clarion for an estimated $30m. In 2019, it bought 20 B2B magazines from Informa Plc for almost $60m.
In 2022, it is estimated that the acquisitions from SouthComm, Penwell, and Informa (some 40 brands in total) will generate 75% of EBM’s revenue whose major brands include: Industry Week, Electronic Design, Buildings, T&D World, Oil & Gas Journal, Firehouse, and Motor Age. About 50% of the EBM revenue comes from digital, 35% from print, and 15% from events.
Ferrell has the infectious enthusiasm of a CEO who has been doing a deal every two weeks in 2022. His rationale for EBM draws on the strength of vertical B2B specialists in the US like North Star Travel, FreightWaves, HMP Health, and Hanley Wood (construction). But it’s ironic because, although the fast-growing EBM has its strongest revenues from four broad sectors (manufacturing, industrial technology, transportation, and building, it actually operates in no fewer than 12 markets including security, energy, city services, dentistry, and healthcare. Its wide-ranging portfolio seems to be much more like the traditional B2B publishers in the US (Cahners, Penton, and CMP) than the new-style vertical specialists. Like the former multi-market B2B companies, EBM may come to realise that a long tail of small ‘adjacent’ brands seldom contributes much to the performance of content-strong market leaders; they can become an expensive distraction.
The Nashville-based company has developed an enviable reputation for digesting acquisitions and for quickly getting financial and content systems integrated. It has already injected real energy into some tired brands. But what’s the strategy? For all the talk about centralised systems, video studios, audio facilities and the move to digital – at least some of which may contradict the declared mission to build integrated, specialist teams in large verticals – there is relatively little sign of a determined move, for example, to build readership revenues. Like many companies, EBM’s apparent diversity of revenue amounts to an overwhelming dependance on inter-related advertising, content marketing, and sponsorship. But that’s just the start.
These are early days, of course. But one inevitable result of putting together a large number of acquisitions and a sizeable workforce during these pandemic years is the inevitable side-stepping of location strategy. Where once the post-acquisition location of individuals or businesses required positive decisionmaking, the whole WFH culture has almost dictated the need to maintain the status quo. That’s why EBM has 10 publishing locations dotted all over the US and many of its people working from home.
None of this is a challenge to efficient systems, data and financial control but it can become a considerable handicap for a company needing to build a distinctive culture and fast-track its organic development. And that is the point.
There is a reason why it is smart to acquire print-centric, advertising-dependant brands from companies which have (more or less) given up on them. Arguably more in B2B than anywhere else, these assets can provide the perfect, low-cost runway to a digital future with diversified revenues. But building creativity and new product development calls for the kind of teamwork and flexibility which is, let’s say, a bit more difficult between strangers and at a distance.
Chris Ferrell’s investors may be pleased at the company’s progress in racing to $200m of revenue and $40m of EBITDA. It is now one of the largest B2B publishers in the US. In that sense, it is comparable to the impressive Industry Dive, which is known to be seeking new investors almost three years after it was acquired by Falfurrias private equity. The process will be closely monitored by existing and prospective EBM investors. But CEO Sean Griffey’s 10-year-old digital company has a robust strategy of producing well-branded, formulaic newsletters and diversifying into paid-for information and events. It has made some acquisitions but Industry Dive has been a lot more about organic growth – and 30% profit margins.
Endeavor Business Media itself now has the task of creating a distinctive strategy to appetise investors.
There are many possible options, most of which involve focusing primarily on a smaller number (maybe 5-6) of the ‘best’ sectors. It could, for example, identify the opportunities for statistics, research and paid-for information in these “super sectors” and launch standardised, paid subscription newsletters/ digital services with a shared branding. Research, data management, production, and marketing would be centralised. The strategy could help the publisher leverage its most venerable brands, build substantial new revenue streams – and create a distinctive, market-leading company. None of that would preclude current plans to exploit the first party data of its 9m reader-users for digital advertising and lead generation – and squeeze profits from what is a large B2B portfolio.
It’s all possible – and might just become more urgent if a recession slashes advertising budgets. After the spending spree, it’s all about the runway.