This is a guest article from Lorraine Ruckstuhl, corporate director for technology, media and telecoms at Barclays, which has been working with B2B publisher Centaur Media by funding its recent acquisitions, such as Econsultancy and Profile Group. Here she gives some background on those deals and the strategy behind them.
Maintaining advertising revenues is one of the most pressing challenges in the publishing industry as it switches from print to digital. Publishers need to be creative in the way they entice high-value, loyal audiences and keep them engaged online and offline.
This both helps retain the audience and at the same time makes them more attractive to advertisers looking to broaden their reach. To achieve this, it is important for publishers to fully understand audience habits and to invest in appropriate online, digital, mobile and events.
Adopting multi-channel strategies to create new revenue streams
B2B publications often have an advantage over their B2C counterparts because they are already aimed at a niche audience, with a ready-made readership – often these are communities of high-value professionals. Yet, while many B2B brands pride themselves on the level of knowledge, in-depth content and analysis they can offer their readers in print – digital and mobile offerings are becoming increasingly important revenue tools.
Centaur Media’s The Lawyer, for example, has a strong hold over its audience with a combination of print and online content, coupled with specialist industry events and conferences throughout the year. Elsewhere, Centaur will be launching an iPad version of Creative Review, with exclusive content and video.
Centaur Media’s acquisition strategy
During the past year, Centaur Media has also undertaken a strategy of acquisitions designed to further boost the position of its various brands and strengthen both the events side of the business – which was relatively resilient during the recession – as well as continuing to expand into the digital space.
For example, in February, Centaur acquired Profile Group, a specialist digital information business for media, PR and marketing professionals. Profile Group will become part of Centaur’s Business Information division. Through collaboration with the group’s existing brands, including Marketing Week, Creative Review and the Headline Group, the acquisition will help to bolster the publisher’s strategic objectives of growing digital revenues in core markets.
In addition to this, Centaur announced in June that it acquired Econsultancy, a digital and event-led information provider (Patrick adds: read our interview with Econsultancy CEO Ashley Friedlein). Econsultancy will also become part of the Business Information Division and will further strengthen Centaur’s position in the growing digital sector.
To secure the financing needed for strategic acquisitions like these, publishers will often need to demonstrate prior experience of acquisitions. This can help demonstrate that a secure infrastructure and understanding is in place for a successful integration and for the business to continue to expand successfully. Publishers planning acquisitions should consider appointing new board members with the right skills set if they don’t currently have this experience on the board.
Using digital to attract advertisers
The continuing shift to online is leading businesses to put more emphasis on this side of the business with new tablet apps and social communities amongst other things. It’s clear that a key component of this strategy must include the ability to attract and retain advertisers.
In Centaur’s case, newly acquired digital services and events, coupled with in-depth editorial and comment provided by the print publications, should also stand the group’s brands in good stead to maintain their hold over their audiences – and therefore advertisers.
Having established advertising relationships demonstrates to financiers that the publisher or publication holds a strong position in the market that can then be rolled out across other forms of media, ultimately reaching a broader audience and attracting more advertising as a result.
Growth plans and your bank’s role
Whether building out digital capabilities internally or acquiring companies with specialist expertise, it’s important that acquisitions are fully integrated into the company. For Centaur, the strong position of its brands, plus the group’s recognition of market changes and new strategies to address this, has helped the publisher to come out of the recession with no debt and as such, it’s been able to attract funding and pursue the necessary acquisitions.
Barclays, for example, in February 2012 co-arranged a four-year £40 million revolving credit facility to support the company’s acquisition and growth strategy.
Early engagement with an experienced financial partner can mitigate uncertainty around which type of funding is appropriate and ensure that the business is fully prepared and ready for an acquisition – this could realistically take up to six months – and the potential impact on company finances.
Any potential financial partner will want to see the last set of audited accounts, as well as the most recent management accounts and realistic forecasts. To support this, due diligence on the financials and commercial aspects may be conducted on each case.
All of this will help the bank put together an appropriate debt structuring plan. But, as publishers have been forced to find more creative routes to advertising, so have banks had to become more flexible in the way they approach the publishing industry. So, while a typical deal might have a three-to-five-year term with restrictions on, for example, acquisitions, disposals and dividends, the specific terms and conditions will vary from company to company and be based on their individual circumstances and plans.
Choosing a financial partner who fully understands the future aspirations of the business and the sector will allow the necessary guidance and advice to be provided for the organisation to attract advertising, grow and develop.