Recent filings from publicly traded companies with b-to-b media holdings, including TechTarget, McGraw-Hill Cos., United Business Media and Reed Elsevier, offer insight into the health of the sector as a whole.
The bottom line is that these companies are trying to minimize the negative impact of advertiser-supported businesses while emphasizing the health of data businesses (if they have them).
Information technology media company TechTarget filed quarterly reports for the first and second quarters simultaneously on Aug. 17 due to a restatement required because of inconsistencies in when revenue was recognized. The filings show that even Internet-focused companies are suffering in the advertising downturn—but not as much as companies focused on print.
TechTarget's revenue for the first quarter was down 21% compared with the same period last year, as revenue fell to $18.5 million. The second quarter showed similar results, with revenue falling 21% to $21.7 million. TechTarget abandoned print completely late last year; print accounted for 5% of its revenue in both the first and second quarters of 2008.
TechTarget's Internet revenue, although it declined in both the first and second quarters of this year, has shown some resilience. In the first quarter, it fell 11%, and in the second quarter, 7%.
“Turning to the company's performance, the market seems to have stabilized, and we are encouraged by our sequential revenue growth in Q2 and our strong cash flow. Our primary focus continues to be to take advantage of the downturn by investing and growing market share, while maintaining healthy profitability,” TechTarget's Chairman-CEO Greg Strakosch said in a statement.
The company said it expects revenue of $21.7 million to $22.7 million in the third quarter. At the low end of that prediction, revenue would be off 13.9% compared with the $25.2 million TechTarget generated in the third quarter of 2008. At the high end, revenue would be down 9.9%.
The larger media companies—McGraw-Hill, UBM and Reed Elsevier—all had similar stories for the second quarter and first half: Revenue in their b-to-b divisions was down, advertising-supported products were especially weak, containing costs was critical and data businesses were relatively strong.
“Cost containment will be a priority all year,” Harold McGraw III, chairman and president-CEO of McGraw-Hill, said in a statement regarding the company's second-quarter results. The company's b-to-b group, which includes the Aviation Week,
BusinessWeek and McGraw-Hill Construction brands, saw a 10.2% decline in revenue to $215.8 million for the quarter.
McGraw emphasized the strength of the company's Platts data business: “A solid performance by Platts in global energy markets in the second quarter was offset by weakness in the automotive sector at J.D. Power and a decline in advertising in aviation, construction and BusinessWeek. Advertising pages in BusinessWeek's global edition declined by 34.3% in the second quarter.”
United Business Media, in reporting results for the first half, noted that it had cut 350 positions and closed 15 print titles. Print revenue was down 24%, and attendee revenue for the company's events fell 22%.
UBM pointed out that it had bought two data businesses in July: Iassist, a health care business, and RISI, a forest products business (UBM acquired the equity it did not already own in the latter).
The company also emphasized its transformation from a print advertising-supported company to one that relies more on stable business data streams. In 2004, it generated 56.2% of its revenue from print. By the first half of this year, that percentage had fallen to 19.8%. In the same time frame, revenue from data business increased to 29.1% of the total, from 6.0%.
Reed Elsevier saw its revenue for Reed Exhibitions tumble 24% in the first half and its revenue from Reed Business Information decline 18%. The company recently announced it was putting a portion of Reed Business Information in the U.S. back on the market. M