After being blindsided by the tech wreck, Penton Media Inc. Chairman-CEO Tom Kemp said he is starting to see some light.
"We think weâve bought ourselves enough time to get to the bottom of the b-to-b market," Kemp said. "When youâve been though the pain and suffering we have, you think about surviving as an entity and not going bankrupt."
Penton is still grappling with an uncertain future, and much depends on whether the economy turns around this year. Thatâs true for a number of b-to-b publishers, but for Penton in particular. The publisher, which markets 61 trade magazines, including Internet World, IndustryWeek and Restaurant Hospitality, and produces more than 100 trade shows, conferences and Web sites, made a controversial decision to go public in 1998. The IPO occurred as Penton was shifting its marketing toward high-tech media products and away from its smokestack publishing origins.
The company rode the tech wave while it lasted. Its stock price peaked at nearly $36 in the summer of 2000 and then, after the bust, started a gradual fall to less than $1. Under an agreement reached in December with the New York Stock Exchange, Penton faces delisting if it fails to push its stock price to at least $1 for 30 straight days. The stock closed Feb. 5 at 61 cents a share.
Propping up its finances
Meanwhile, to help prop up its financial house, Penton has been busy selling off non-core assets. In January, it sold Professional Trade Showsâwhich produces more than 25 shows serving the plant engineering and maintenance, building and facilities, material handling and machine tools marketsâto Cygnus Business Media. In December, Penton sold Streaming Media Inc., which it had acquired in 2001, to Information Today Inc.
"These deals were less focused on maximizing sales prices and more focused on getting rid of money-losing and non-core properties," said Reed Phillips, managing partner in the media investment-banking firm DeSilva & Phillips. "If the market improves, they [Penton] will be OK."
Penton also cut a third of its work force in 2002 and merged its Penton Technology Media and Penton Lifestyle Media divisions into one unit.
Kemp said he expects 2002 revenues to be down 30% from 2001. Penton reported a net loss of $283 million in the third quarter of 2002 compared with a net loss of $29.5 million during the same period in 2001. Revenues fell to $49 million from $62 million a year earlier.
In addition to shedding non-core assets, Penton is trying to leverage the editorial content of its existing properties to build new revenue streams. Here are two examples:â¢ At the National Safety Congress in San Diego last October, Penton launched Responder Safety, a quarterly magazine targeting 20,000 emergency response professionals.â¢ In December, Pentonâs New Hope Natural Media division, which serves the natural products industry, partnered with Nurnberg Global Fairs/BioFach America to launch the Organic Products Expo-BioFach America. The trade show premieres at the 19th annual Natural Products Expo East, to be held Sept. 4-7 in Washington, D.C.
B-to-b media buyers say they will stick by Penton despite its ongoing woes.
"Just because theyâre in financial trouble you donât say, âLetâs drop them,â" said Irene Hindman, VP-media director at Bader Rutter & Associates, who has bought ad space for her clients in Pentonâs IndustryWeek, Material Handling Business and Material Handling Management magazines.
"What weâre buying is a particular audience in a credible environment, and as long as that exists, weâll continue to recommend them," she said. "But if they, say, dropped the audit[s] or started messing with the editors, then advertisers would start to drop out."