UBM's reinvention as an events-driven, digital content marketing business is reaching a key point as the company looks to stop restructuring and concentrate on building organic growth through global tradeshows.
CEO David Levin says the company will have either sold its existing traditional media businesses in the Tech and Built Environment divisions or recast them as digital, events-driven content marketing brands by the end of 2013 - but he admits the process across the entire group will take longer than that.
Print revenue fell 11 percent in the first half of 2013, with even online media revenue falling four percent, as event income from emerging markets continues to soar. Operating profit fell nine percent from the same period last year, with revenue flat at £391 million.
Speaking to TheMediaBriefing, Levin admited that the first three months of 2013 were tough and that events in the UK Built Environment stable, including Ecobuild, had a "torrid time", in stark contrast to continued growth in China.
UBM may have reduced its reliance on cyclical, volatile advertising. But now it's a globe-straddling conference/expo business, isn't it just exposing itself to a different kind of cyclical volatility, with a lot of deferred benefits? The £50 million purchase of Ecobuild two years ago exactly, for example, has yet to bear fruit.
Levin told us:
There is a cyclical element with any show. We monitor that very closely - the cyclical element comes from our decision to invest, which saw a double-whammy on the bottom line, because of the market and also our investment to make the product better.
On whether China's growth is over-hyped, Levin attacked the "bunch of commentators who've never been there who want it to go 'pop'".
But don't expect serious money to start pouring in from UBM's event investments any time soon: it's a long game over four to five years for many of the events being launched now and recently.
If you look at geo-adapts [exporting a show to a new country], they are not going to make any money year, and next year or the year after. But on a three, four, five year horizon we will end up with some monsters in a really strong portfolio.
Transition story not over
In the Marketing Services division - which includes the bulk of the company's "old" media assets - revenue fell 11.6 percent to £65.7 million.
UBM's transition from traditional magazine-based publishing to content marketing service is now mature but still not quite finished. The company this year offloaded Delta and various data products for £160 million and the remainder of the old CPMi titles, including Property Week, are also up for sale as we reported in June. The company has stopped printing its US tech titles, including EE Times, which is no surprise and maybe overdue.
For a good illustration of the narrative at UBM's business model transition, just compare the 2005 revenue mix to now, with the orange events segment getting ever bigger:
As Adrian Barrick, chief content officer at UBM, told us, the goal now is to connect communties to events and products through digital content - not to sell or monetise the content.
The restructure will be over by the end of the year, which will cheer investors: the process has cost the company £9.6 million so far. Here's what the division will look like by the end of 2013:
Emerging global opportunity for expos
But the company's strategy of building growth in fast-moving events markets across the globe is gaining momentum, particularly in China, which makes up 27 percent of total event revenue.
-- Emerging markets revenue was up 10.4 percent to almost £90 million. These events contributed £19.6 million. Forward bookings for UBM's top 20 shows is up 11.7 percent for the half.
-- Capacity is a problem for expos in BRIC nations but help is on the way: a new venue in Shanghai that's five times the size of London Excel will be ready end of 2015
Chemist + Druggist
In a bizarre development, UBM sold the pharmaceutical publishing brand Chemist + Druggist as part of the Delta deal - but now the buyer has given the brand back and UBM retains ownership. The company says this the sale was "subject to a condition precedent which has not been satisfied," whatever that might be. C+D made £1.1 million in operating profit on £2.8 million in revenues in the first half. Despite being happy to sell it two months ago Levin tells us he's "delighted to have it back".
Positive outlook but patience required
In the big picture, for the first half of the year, UBM's operating profit fell £7 million to £80.7 million, thanks to a tough Q1 blamed on the the absense of big bienniel events, with revenues flat at £391.1 million.
UBM expects revenue to grow between three and five percent for the rest of the year with margins around 22 percent.
As with its peer Informa, which claims to be approaching the end of a digital transition, it feels as if the Artists Formerly Known as B2B Publishers are now nearing the end of a journey to becoming client-led, events-driven, platform agnostic media companies without many "traditional" news-based media brands in sight.