Saturday, April 12, 2008

Financial crisis in B2B publishing

Things are awful and getting worse.
That's my conclusion about B2B publishing as yet another company takes drastic measures after finding it can't carry an absurd debt load in a recessionary economy.
Yesterday, in an email to employees, Penton CEO John French announced a companywide salary and hiring freeze. He also requested ideas on cutting costs. John also "asked for a complete reforecast from all of our product managers, including a restated revenue forecast and a projected expense forecast for the remainder of 2008." That process should be completed by the end of the month, at which time John promised to report back to the staff "on our findings."

Penton's announcement comes in the wake of a slew of bad news in our industry. And when I add up these events, I see catastrophe.
I don't want to sound too dramatic, but I've gone from being worried to being worried sick. Much of B2B publishing -- weighed down by the twin albatrosses of junk bonds and rising print costs -- has sunk into a death spiral.
Consider the news of the past few days:
  1. Northstar Travel Media announced yesterday that it's for sale. Boston Ventures, the private equity company that bought Northstar from Reed Elsevier in 2001, has apparently had enough. The Northstar sale will take place in a particularly tough environment. There's already a ton of B2B properties on the market -- including Reed Business Information, the U.S. B2B unit of Reed Elsevier.
  2. Among the B2B companies languishing on the shelf is Ziff Davis Media. Late last year, Ziff managed to sell its most valuable properties. This week the new owner of those properties, Ziff Davis Enterprises, announced companywide layoffs. It's also worth noting that both Ziff Davis Media and ZDE have recently gone back on the promise to cease the unethical use of in-edit advertising -- a sure sign of desperation and idiocy.
  3. Earlier this week Nielsen Business Media announced another series of layoffs. It's still unclear just how many jobs were cut in this round. But news reports put the total loss of jobs at the former VNU at around 4,000 in the past year.
Shelter from the storm
Over at Penton, there are some exceptions to the hiring freeze.
Penton's New Media Group will be spared, because, as John noted, "these activities are critical to our revenue growth plans for both the near and long-term future." (Disclosure: I've consulted on several projects for the group.)
That shouldn't surprise anyone.
The giant publishers -- and many of the smaller ones too -- are in the exact same position. Their revenue is falling while their print expenses are rising. Choking on debt, all they can do is exit the game entirely or cut expenses and double their bets on new media.
There's simply no other way out.

But there is another way out for the editors, salespeople and designers of B2B.
You can walk away from print.
And it's way, way, way past the time you did so.

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  1. Paul...sounds like an opportunity for smaller publishers who lack the ingrained structures of larger publishers, as well as the heavy weight of print on their shoulders.

    Also, when reading this, some may also consider this getting close to a bottom for b2b publishers. Almost like the signs a bear market is over...when all hope is lost.

    Nice post.

  2. Hi Joe,
    There's also opportunities here for many of the folks in your world of content marketing.
    Here's why:
    1. In a financial crisis, folks may be wise to avoid using the custom-publishing units of the big publishers and instead go with small, specialized content-marketing firms -- particularly those that are Web-centric.
    2. Those content marketers who produce print products will be able to pick up new staffers for a song. There are thousands of print-based folks looking for work. And the giant publishers won't be hiring them.

  3. Paul:

    Thanks for the layoff updates; I was actually invited to come interview for a Penton position in Connecticut, but the company wouldn't pay for the flight out. Also, it wasn't going to pay relo (of course), either, and the only reason the hiring editor-in-chief was being allowed to search for a ME was due to the group being realigned. Pay was low for that part of the country, but the opportunity would've been nice. Oh, well; perhaps it's for the best.

    So on that note, where -- specifically -- would you suggest B2B writers/editors look for jobs in the digital world? I'm curious if there are even places for all those thousands of print-based folks to go?

  4. Paul:
    All forms of media are going through gut checks right now. The bigger they come the harder they fall. Hey, even Google's stock is down 40%. B2B has always been about finding hot niches and capitalizing on them. I agree with you to a point: "You can walk away from print." But don't walk away from B2B.

  5. You can also add Reed Business Information into the mix - there have been layoff down in Sutton, too.

    Not to mention the coming divestment of the entire division.

    Anyone interested in following that story can do so here -