David Levins Gamble

first_img“The company that was CMP is now gone.”That’s whatLondon-based United Business Media chief executive David Levin toldFOLIO: in late February when the company announced the restructuring ofCMP Technology into four separate businesses that will be led by fourco-CEOs. The impetus for the restructuring came after months of marketanalysis, Levin said, during which UBM determined that the company wasworking in “very different markets,” and split into four businesses tobetter align CMP’s products with its customers. UBM also decided todrop the CMP brand altogether.The Four-Way SplitCMP’s new businesses are: TechWeb (with pro forma 2007 revenueof $148 million), a technology market business of Web sites such asInformationWeek.com and Light Reading, and events including Interop andVoiceCon; the Everything Channel (pro forma 2007 revenue of $73million), which formerly was the CMP Channel; TechInsights (pro forma2007 revenue of $83 million), which formerly was CMP’s ElectronicsGroup; and Think Services (pro forma 2007 revenue of $61 million),CMP’s former Game, Dr. Dobb’s and International Customer Managementgroups. The four new businesses sharesupport functions like finance, IT services, legal and global accountand sales management, UBM says. Accounts payable and receivable arepart of the centralized shared services. Human resources and audiencedevelopment roles will be handled on the divisional level. Levinsaid the restructuring is not a sign that UBM may be looking to divestone or more of the businesses. UBM reported CMP’s 2007 revenues weremore than $300 million and profits touched $50 million, up 30 percent.In 2007, the company generated 38.3 percent of revenue from print, 34.2percent from events, 20.2 percent from online products and 7.3 percentfrom workflow tools and business information services. Last year wasthe first since 2001 that CMP realized underlying revenue growth, Levinsaid.CMP had a dramatic reorganization last June, laying off morethan 200 people and closing three magazines in an effort to refocusonline. In January, former CEO Steve Weitzner bolted for competitorZiff Davis Enterprise. Word came that UBM approached at least twodifferent prominent former U.S. b-to-b publishing executives to replaceWeitzner before splitting up the company. To someobservers, the move is less about making the company nimble and moreabout Levin exerting control. One comment to FOLIOmag.com said,“Basically what this is all about is David Levin taking over as thereal CEO, with Scott Mozarsky as his on-site COO to keep an eye on thenew ‘CEOs,’ operations and finances. I presume that the great CMP brandwill descend into the UBM corporate netherworld along with that othergreat corporate brand: Miller Freeman.”FOLIO: spoke withLevin about the thinking behind the move, how both the market andemployees have responded and what this move needs to succeed.FOLIO:: How did the idea for this reorganization originate? What is the purpose of the move?David Levin: It’s a progression. CMP was a fantastic magazinecompany and over the last three years we’ve worked hard to change theshape of the business rapidly. In 2004, almost three-quarters of therevenue was from magazines. Looking into 2008, we’ve said it’s going tobe less than a quarter [of the total revenue].The shift happenedthrough a series of acquisitions worth more than $200 million since2005. Through that period, we’ve progressively increased the autonomyof the structured units within CMP. Last June, there was a majordownsizing of the print side. Print economics require centralizationwhereas other operations—particularly the event businesses and onlinebusinesses—don’t require that same type of centralization. On thecontrary, to thrive, those businesses require a lot of local autonomyand fast decision-making. The restructuring freed us up and moved the business post-print.When Steve left us in the autumn, we ran this parallel process where wehad to make a choice, do we take the decentralization forward or do were-appoint a CEO. We pressure-tested that decentralization against atop crop of external executive candidates in the U.S., as well as ourown internal candidates. What emerged from the feedback from customersand the movement in our product groups was that however talented theappointment we can make, it was going to be less effective thansticking to our belief in agile decision-making. FOLIO:: We understand you spoke with at least two formerU.S. b-to-b executives about taking over CMP. Was the reorganizationPlan B after those offers didn’t work out? Levin: Absolutely not. We were at a position where we could haveappointed a number of talented individuals. This was an active choiceon our part. And I’m kicking myself for not doing it sooner.FOLIO:: What’s been the response internally at CMP? How do you get the employees to buy into this new plan? Levin: I do a regular set of town hall meetings and it’s evidentfrom the flow of people coming up to me that they are happy. It’sevident from the flow of business statistics that sales are up. We areattracting people to the business. Those are the metrics we have touse. FOLIO:: Please describe the management structure going forward.How will you coordinate between U.K. and U.S.-based executives? Who isin charge of what, not just in terms of the new U.S. divisions but onthe UBM side as well?Levin: The company is structured in a highly decentralizedmanner. We have multiple operating units worldwide and we have ahorizontal structure in addition to the four CEOs. In North America,there are six direct reports. Elsewhere, CMP Asia reports to me and CMPMedica reports to me. Where UBM adds value is the allocation of capitaland ensuring and sharing best practices. Third, UBM adds value as anengine of people development. We invest heavily in developing a cadreof leaders. Our Business Leaders program is graduating 20 to 25 people.We like to feel there’s maximum decentralization and autonomy at thiscompany. We have structured for each one of them a board—more in theEuropean sense than in the North American sense—in that it’s a forumfor business needs rather than vehicle for the chief executive to drivehis will into the business. FOLIO:: Tell us about some of those business needs?Levin: The move we’ve been making is how to change from adefensive-posture magazine company to a front-foot forward marketingservices company. That involves moving the culture quite a long way. Wehad very strong financial results last year and that trend iscontinuing.That rebalancing is quite subtle, from controlsystems where you think about page counts first to the realquestion—depending on which business you’re talking about—what doregistrations look like? What do advance bookings look like? Askingabout advertising is something to ask someone who runs a magazinebusiness. Three-quarters of our audience is not about advertising,they’re attending events, they’re buying our services, they’re buyingour intellectual properties. That’s a profound shift. There is a challenge of communicatingthat internally but it’s a lot easier doing that across the fourfocused businesses than it was when we were under one umbrella. It’seasier to do that under guise of new names and new identities.FOLIO:: With that in mind, what was the motivation for dropping the CMP brand? How does this benefit the new operation going forward? Levin: To my mind, a brand is something that means something toits audience. Our audience, in the old CMP world, related to“InformationWeek.” Our audience related to “EE Times.” Our audience atno point related to the word “CMP.” Advertisers at some point may haverelated to CMP but it was not a brand as far as the audience wasconcerned, it was a corporate name that had resonance to theadvertising community. As we have extended the nature of ourrelationships, we have kept key relationships with the audience throughpowerful brands that are in the market. That could be Black Hat, thatcould be Game Developer. They are unchanged.Now, our approach toproviders and exhibitors is much more tailored around whether they’refocused on a specific aspect that can be dealt with by a focused-namecompany. Or if they have a wider set of needs, those customers can buyacross a wider UBM environment. We have run a number of assets outside of the old “CMP Tech” andwe’re getting great traction among the major tech companies wherepreviously we wouldn’t have because of the structure. When I presented this to customers they said, ‘Great, we likehaving a large media partner called UBM, we like the scale, we like tothe combination of scale and focus.’ No other group has the same sortof structure. Asia is a clear geography and in the largestmarket—China—the products carry a local name. We’re all clusters ofproducts where the infrastructure carries the CMP name and there are noplans to change that there.When we changed the cost structure inJune 2007, we gave ourselves the opportunity to take thedecentralization further. That’s not the case with the other examples.FOLIO: What are some of the logistical issues involvedwith positioning the four new units? How much effort and expense isinvolved in scrubbing the CMP brand from items such as cards andmarketing materials?Levin: We’ve got a judicious blend of progressivedecentralization. If it can be done locally, it should be. If it shouldbe done centrally, it will be. With the IT infrastructure—there is novalue in decentralizing that because it just replicates the support andservice costs without any value. With HR, there are some benefits areasthat should remain centralized.FOLIO:: What are the costs associated with this transition? Levin: We’ve not quantified it. We’ve been mindful that if youallow four different groups to do development independently, you mayget additional development costs creeping in. The driver for this wasnever the short-term reduction in costs. The trivial costs ofre-branding, business cards, that’s just something we’ve eaten. Thereal issue is to drive toward more aggressive and faster revenuegrowth. FOLIO:: What are your short-term and long-term goals for this newstructure? What type of financial performance do you see from eachdivision now and what would you like to see by the end of the year?Where do you see growth coming from?Levin: We never laid external goals. It’s worth saying theprofitability of the actual business improved over 50 percent in 2007and 2006. It had its first underlying revenue growth in years in 2007compared to 2006 and looking forward we see that stepping up.Thegroup as a whole achieved 5 percent underlying revenue growth lastyear. I think the technology market should be faster growing thanaverage. What is exciting, suddenly we’re getting out of each one ofthem a clear agenda of growth and development. FOLIO:: What is that agenda for each business group?Levin: It’s quite distinct by group. Each one is coming up witha set of plans. Look at the first acquisitions—Everything Channel hascompleted the acquisition of the former Vision Events business out ofGartner. In a stroke that has changed that group. The TechInsightsGroup has been very fast and ambitious in the way they drove thebusiness. They will run four or five events in India this year, growingvery quickly out of the box from one event last year. FOLIO:: What are the specific challenges facing each group?Levin: Each leader is having to step up to the difference ofbeing a group president, a group CEO. There is a huge jump in terms ofpersonal accountability and ambition. With the process of appointingthem we took each one through the opportunity to lay out theirambitions and their plans for those businesses in a systematic way. FOLIO:: You’ve denied that this move was in preparation forselling off the company. However, many observers still say a sale makesthe most sense. What is your response to that?Levin: It’s no longer a question anyone inside the business asks. I don’t think our customers are asking that.The right way of looking at it is we’re trying to create a platform forgrowth and development of these businesses. We’ve put more than $200million to work in a series of acquisitions and we continue to look foracquisitions. At a personal level, as a former CEO of both hardware andsoftware companies, technology is pretty central to how I think aboutthe publishing world. When businesses are growing and prospering that’sa good time to say, where do you need more resources, not how do youget out of them.FOLIO:: A year from now, what do you want to see?Levin: Stepped up, accelerated organic growth with very clearemergent cultures. I want to see all four groups growing faster butbeing ever closer to their customers.FOLIO:: Do you have a set goal for the next year?Levin: No. Out of each of the four businesses, we’re gettingmuch more ambitious, exciting plans. One context for this: inside ofUBM, we’ve done 54 acquisitions worldwide. Not just CMP Tech, whichaccounts for just under one-third of that. We’ve got a variety ofdifferent models that serve a specific purpose.Previously, I ledthe acquisition of Institutional Investor for Euromoney, I led theacquisition of Internet Securities Inc., and common themes keep comingback. What you want out of these groups is intellectual property. If you look at Commonwealth Business Media, itself anacquisiton, it has transformed itself in a very similar way by theacquisition of OAG Holdings. That business has moved on remarkablysince we picked it up. That’s what we do.SIDEBAR: What’s in a Name? The respective CEOs are Business Technology Grouppresident Tony Uphoff (who takes over TechWeb), CMP Channel presidentRobert Faletra (who will run the Everything Channel), Electronics Grouppresident Paul Miller (who takes over TechInsights) and CMP Game,Dobb’s, and Customer Management groups president Philip Chapnick (whowill run Think Services). last_img

Leave a Reply

Your email address will not be published. Required fields are marked *