Data services are widely touted as the future of B2B media, so why is UBM trying to get rid of its data services division?
At first glance, the simple answer is the division’s economic performance: over the first six months of 2012, revenues fell 10 percent year on year to £90 million, and profits fell 23 percent during the same period, from £17.4 million to £13.3 million.
But the situation is more complex than a simple case of accountants getting the jitters. Those figures show that rather than being the revenue generators of the future, many parts of UBM’s data services business are stuck in the past, and UBM doesn’t appear to have the stomach for dragging them into the future. (We contacted UBM for their take on this).
As Numis Securities media analyst Paul Richards tells TheMediaBriefing: “The term data services is a very very broad church. At the top end you are looking at must-have information delivered electronically on subscription. Businesses that are very strong in that area, you have businesses like Data Monitor within Informa Loading... , you have RMS within Daily Mail Loading... (DMGT), BCA within Euromoney, those are really the crème de la crème of data services.
“At the other extreme you have things like print directories which are much more structurally challenged. The reason UBM is looking to sell its data services business is it is more skewed towards the low end of that spectrum.”
A prime example of UBM’s structurally challenged data services business is French arm Vidal, the biggest part of UBM’s healthcare business, which is in turn the biggest part of its data services division. Vidal makes pharmaceutical directories, dictionaries and other medical information to GPs, hospitals and pharmacies, a valuable business, but much of it is in print or on disk.
Contrast that with Reed Business Information Loading... subsidiary ICIS, which is the world’s largest petrochemical market information provider delivering pricing data and other information in a range of digital formats (and fax) either daily or on a rolling basis.
The digital approach taken by ICIS comes with its own challenges, as described by managing director Christopher Flook last month, but it is clear which business model fits Richards’ creme de la creme and which is facing thelong hard slog involved in turning its model into one fit for the 21st century.
Modernising the data business
There’s nothing to say UBM businesses can’t be dragged into the modern world and turned into successful, structurally sound businesses, but UBM’s decision to sell suggests they aren’t prepared to put the work in to do so when they could be concentrating on their faster growing events business – which contribute annual revenues of £233 million.
As Richards puts it: “Evolving the business is the way UBM has been moving, but given the industries they are in, (the question is) are these businesses best owned by them rather than other people? The business is skewed towards health mainly in France, technology globally and transport mainly in North America. They are all decent verticals – I am sure UBM will find a good buyer for those businesses.
“I wouldn’t be surprised to see it broken up into separate bits. Private equity would look at pieces of it, and I am sure there will be trade buyers that will be interested in it as well.”
UBM director of communications Peter Bancroft points out that many parts of UBM’s data services business are highly digitized, such as UBM TechInsights, which analyses intellectual property rights in consumer electronics, and UBM Aviation, which provides airline scheduling information.
He also said that while UBM does see events and its PR Newswire Loading... service as the areas where it has the most competitive advantage, it hasn’t committed to selling of all its data services businesses quite yet.
He told us: “There are some very detailed and very specific big data businesses, and there are other businesses that are more the traditional data businesses in the sense of directories. We are in a process of a review of these businesses and part of that is to take them to market to establish what those businesses might be worth to other owners. They may be able to see synergy opportunities, and to take them in different directions and invest in them in a way that UBM is unable to.“
Data transition headaches
If UBM does sell, the question remains over whethere there are firms out there capable of moving UBM’s data business over to comprehensive digital-first subscription model. If the parts are split up along geographic and vertical lines the process could be easier. However, some parts of the business will find it tougher to change than others.
“It really depends on the strength of the market position,” says Richards. “If you have a market leading print business, you have a decent chance of evolving that online, but even if you look at Reed Elsevier Loading... the had the leading directory of US lawyers, Martin Dale Hubble, which was enormously profitable, but then along came Google Loading... .
“It really depends on the type of information if it is niche must-have data rather than something more broadly available, then you have a chance to transition that online, but frankly it should have been done already. The internet isn’t something that has suddenly been invented in 2012, the print to online transition should have been done already, anyone who hasn’t done it is behind the game."
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