Interview: David Levin, CEO, UBM: Organizing For Audience; RBI Would Be ‘Backward Step’

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A busy day for United Business Media – splitting its CMP tech publishing unit in four and posting 2007 results (operating profit up 11.5 percent on an adjusted basis). UBM CEO David Levin explained breaking CMP apart is all about brand over medium…

Shifting from print: When Levin joined three years ago, three quarters of revenue was from magazines. But, after spending $225 million on 17 other properties, mags now make up less than a quarter of revenue. “If 75 percent of your revenues come from your events, information services, the way to maximize profits is to (let) those units act in an autonomous fashion, focused on their customers.”

Organizing for audience: “The business is now integrated – with media, events, online, print and information services. The market was crying out for these things to be audience- and market-centric. We don’t any longer have to be governed by the overwhelming economies of scale that come from print.” So CMP becomes TechWeb, TechInsights, Everything Channel and Think Services – each “very discreet”. “We’ve taken out a holding company layer which no longer was adding value – if the guys dealing with enterprise want to do something, they are empowered to do something; they don’t need to go through a central hub of overhead.”

But how can becoming smaller help you compete with big players like IDG? It will have “no bearing”. Example – though each unit is individually empowered, UBM is also retaining a central team to sell ads across technology publications.

RBI: How about buying Reed’s B2B unit? “We’re not interested. The last three years, we’ve spent a huge effort in creating this integrated media model, linking events, online and data together. It would be a huge step backwards for us to go out and look for a print player with some online properties.” UBM may buy others, though, and will increase it’s acquisition budget from last year’s £95 million ($188 million) to between £150 million ($298 million) and £250 million ($496.82 million). UBM’s bought one company every three weeks on Levin’s watch.

Present day: “We’re no longer going to be managing this business by looking at the next – we’ve effected the transition, we’re no longer a print company.” It’s 19.2 percent online, 40 percent events, 24 percent print and 16 percent data. Levin said income from last week’s Games Developers Conference in San Francisco is 15 percent up on last year.

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Aaron

Its great that the UMB media machine can spin a 200 employee layoff and product execution into an 11.5% increase in profits, but that doesn't necessarily add up to sound and growth oriented business.

Layoffs and meager growth from online revenue doesn't add up to some new paradigm shift in business, but rather a clever financial illusion of smoke an mirrors at year end.

In 12 months lets see what taking a large part of the creative catalyst out of CMPs arsenal does for business. With other publications on the ropes or on the mat, facing substantial debt from online expenditures and meager returns from online speculation, will the new transformation really add up to dividends for UMB? Or is it just a signal of a slow, contained decline? Sure the public execution of major magazines and increased emphasis on online products looks a bolds step. But can UMB survive killing the cash cow because she's lost a little weight?

An announcement of this sort reaks of divestiture and should be a rallying cry for CMPs competitors to strengthen their brands and prepare themselves for picking up meaty advertising revenue while UMB concentrates on the scraps.

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