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Cash-strapped Penton looks to Web for revenue

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New Internet czar Shanfelt to oversee sharing of best practices among units

New Penton Media CEO David Nussbaum is hoping that Eric Shanfelt will be the troubled company's answer to Spiderman: a master with the Web.

When Nussbaum took over as CEO of Penton last month, he quickly furthered the company's cost-cutting efforts, but he also made a move designed to increase revenues when he appointed Shanfelt as VP-e-media strategy.

In this role, Shanfelt, who was previously director of e-media strategy for Penton's IT Media Group and New Hope Natural Media businesses, is essentially the company's Web czar. Moving between Penton's various units, he will act as a conduit for online best practices. Business units had shared best practices at the company under former CEO Tom Kemp, but this new arrangement formalizes the practice. "The crux of my job is to kick the existing e-media efforts into overdrive," Shanfelt said.

Industry observers support the move. "It can't hurt," said Joel Novak, managing director at communications industry investment bank Berkery, Noyes & Co. "If you look around the industry, it's probably the most dynamic revenue stream in b-to-b. Still in terms of overall revenue, it's very small, but it's growing rather rapidly for most companies."

Industry observers characterize Penton as a cash-strapped company with long-term debt of substantially more than $300 million. While its earnings before interest, taxes, depreciation and amortization improved in its last days under Kemp, its EBITDA remains barely enough to meet the company's interest payments. Penton's financial standing will become clearer when it releases its second-quarter earnings later this month.

Inside Penton, some quarters have offered quick acceptance to Shanfelt's new role. "He has more ideas than God," said Teri Mollison, publisher of IndustryWeek. "He's the most prolific e-mail writer I've ever seen."

In addition to communicating via e-mail, Shanfelt has spent much of his first weeks on the road, visiting various Penton offices and trying to jumpstart the company's Web efforts, which have been seen as trailing the Internet offerings of other b-to-b media companies. While Shanfelt disputes this characterization, pointing to the strategies of such Penton Web pioneers as Windows & .Net and the business technology group, he does acknowledge that the company has dragged its feet in other markets. "Certainly, there are some markets that maybe haven't been as aggressive as they could have been," he said. "There are also some markets that, quite frankly, wouldn't have been ready."

Overall, Penton had e-media revenue of $13.9 million in 2003, which was 6.7% of the company's total revenue. For year-to-date 2004, Shanfelt said Penton was growing its interactive revenues by 30% to 34% over the same period in 2003. Through June, the company's Internet revenues accounted for 8.8% of total revenue.

Revenue bright spots online

Several bright spots are driving Penton's online revenues. Serving a tech audience, Windows & .Net has been a leading Web property for Penton. The site generates about 1.5 million unique visitors and 8 million page views per month. It has also been innovative, pioneering "roadblock" ads, which are full-page ads that dissolve to the home page after 20 seconds.

Penton's business technology group, which includes Business Finance, Business Performance Management and the Web-only "Internet World," has also been an interactive leader for the company. The unit generates 44% of its revenue from online efforts, according to David Blansfield, group publisher.

The unit has relied heavily on Webcasts, which go for $40,000 on the rate card. It has conducted more than 100 Webcasts since beginning to use the format in 2000.

ALG Software, a $20 million enterprise performance optimization software company, uses Penton's business technology group to create Webcasts and conduct surveys of its readers. The leads combined with the simple act of getting ALG's name in front of this audience make the effort worth it, said Jean Nobel, ALG's director of marketing, North America. "That is invaluable for a company our size," she said.

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