James DePonte is an audit partner in PricewaterhouseCoopers' New York office, focusing on the business information and media industries. He is also one of the originators of the company's “Global Entertainment and Media Outlook,” an annual study that provides a five-year history—and five-year forecast for trends—in 13 industry segments. This year's edition projected that the b-to-b media, trade show and business information segment will grow at a 2.7% compound annual growth rate (CAGR) for 2013 through 2017, from $78.81 billion to $88.12 billion.
Media Business: PwC's Outlookforecasts that trade shows and business information will each grow at more than a 4% CAGR, while business media will shrink slightly, with -0.7% CAGR in the 2013-17 period. What does this performance mean for M&A?
James DePonte: These businesses are looking better, but they're still far from going gangbusters. The core asset for business media and information companies is content. These days, that content has to be available on multiple platforms, so valuation requires looking at how a company is monetizing all platforms and business models. You have to look at the total package from an M&A point of view.
MB: But b-to-b media executives say buyers tend to dismiss print revenue altogether. Is that correct?
DePonte: An M&A transaction needs to contemplate that print is being replaced by digital at lower revenues, but I don't believe print will go away entirely. Even though there will be new business models and new ways to consume content in the future—some of which we haven't yet thought about—I'm pretty confident that people will continue to consume content in print form to some extent.
MB:Why are trade shows and business information doing so well?
DePonte: Economic activity has started to pick up, and businesses are starting to invest more in trade shows to enhance their positioning and introduce new products. As macroeconomic factors gradually improve, trade show investment is likely to go up for the foreseeable future.
For business information, the important issue is making the data more useful and valuable to the customer. As we see greater use of technology and analytics, that's where we will see the growth.