Informa Buys Vidcon // How to Fix and Valuation Estimate

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss Informa’s acquisition of Vidcon, including the deal value prop, deal valuation estimate, and how Informa can improve and grow Vidcon going forward.

 

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Informa, a UK-based publishing, business intelligence, and exhibitions company, bought Vidcon from Paramount Global.

No deal details were released, but I went through Informa’s public filings to extrapolate a better sense of the business combination logic, and what Informa might be willing to pay based on their own valuation benchmarks.

I also raise key questions about the deal, and make recommendations for how Vidcon can improve its overall guest experience.

Let’s break it down…

 

💰SELLER: Vidcon

• Live events business for digital media content creators
• Founded by brothers Hank and John Green in 2010
• Based in LA (formerly Missoula, MT)
• Focuses on 5 audiences: fans, aspiring creators, industry pros, featured creators, sponsors
• Each event has 3 distinct tracks: Community, Creator, Industry 
• Expanded to int’l cities in 2017; Mexico City, Sao Paulo, London, Melbourne, Singapore, Anaheim, Baltimore
• Shut down 2020-2021 due to COVID, launched virtual programming called Vidcon Now
• Growing competition from digital-native events like VidSummit, Creator Economy Live, Twitchcon, and new creator economy tracks from SXSW, Cannes Lions, ComicCon
• Recent struggles incl canceling 2024 Vidcon Baltimore
• Est team size of 15-25 people, + TBD contractors and freelancers

 

🌟PERFORMANCE HIGHLIGHTS: Vidcon

• Est annual revenue of $18M (per growjo)
• Revenue from (1) sponsors / advertising (2) ticket sales (3) subscription
• Est 50-100 annual sponsors
• Rumors of unprofitability
• 85,000 attendees across events network in 2023
• 55,000 attendees of flagship Anaheim event for 2024, flat YoY
• Peak Anaheim attendance was 75,000 attendees in 2018 (up from 1,400 in 2010!)

 

▶️M&A HISTORY: Vidcon

• 2018 Viacom (now Paramount) acquired Vidcon to expand live events biz
• Spring 2024 hired bank to explore sale 
• Sep 2024 sold to Informa

 

🤵VIDCON OWNER: Paramount Global

• American mass media and entertainment conglomerate
• In process of $8B merger w/ Skydance, expected to close 2025
• Formed through merger of ViacomCBS in 2019 (were separated in 2005)
• Original Paramount Pictures founded in 1912
• Main properties incl Paramount film/TV studio, CBS Group, CW TV networks, BET Media Group, Paramount Media Networks (MTV, Nickelodeon, Comedy Central, etc), and Paramount Streaming (Paramount+ and Pluto)
• 22k employees as of Aug 2023, laid off 2k employees in 2024
• Business facing challenges due to rapid decline of linear TV biz and slow streaming growth 
• FY 2023 financials: $30B revenue, ($450M) operating loss

 

🤝BUYER: Informa

• Publishing, business intelligence, and exhibitions company
• Based in London, publicly traded on LSE
• Founded 1998 via merger of IBC Group and LLP Group
• 12k employees in 30 countries, serving 150 countries
• Target customers are professionals, businesses, and researchers
• Growth through extensive M&A
• Continues to acquire conventions and focus on fandoms via its “Fan Expo HQ” brand, which sits under Informa Connect, its portfolio of exhibition brands
• 1H 2024 financials indicate strong demand for live B2B events biz
• Events biz model: stand space, tickets, sponsorships, brand promo in-app/pre-event mktg/onsite,
• Recent asset sales to streamline biz and free up cash

 

📃SELECT M&A HISTORY: Informa

• Taylor & Francis, publishing 
• IIR Holdings, a human capital development co
• Hobby Star Marketing, incl Fan Expo Canada and Toronto ComicCon
• Dove Medical Press
• UBM
• Tarsus
• TechTarget
• $1.6B bid for Cannes Lions owner Ascential was accepted in July 2024
• Vidcon

 

🔎BIZ DEPTS: Informa

• Academic Mkts — research and advanced learning 
• B2B Mkts — Live and on-demand events, B2B digital services
• Informa Investments — portfolio of investments

 

💰FINANCIALS: Informa (in GBP)

 

Stock price as of 9:55am Central Euro Time on 9.19…

• Stock price: £846.6
• Mkt Cap: £11.3B 
• Up 9.5% YTD
• Up 12.9% YoY

1H 2024 financials as of 6.30.24 vs 1H 2023

• Revenue: £1.7B, up from £1.5B
• Adj EBITDA: £519M, up from £462M
• FCF: £289M, up from £225M
• LT DEBT: £1.7B, up from $1.5B
• C&CE: £342M, down from £1.1B

YE 2023 financials as of 12.31.23 vs 2022…

• Revenue: £3.2B, up from £2.3B
• Adj EBITDA: £952M, up from £584M
• Adj EBITDA margin: 30%
• FCF: £632, up from £466M
• LT DEBT: £1.5B, around same YoY
• C&CE: £389M, vs £2.1B

 

🔎DEAL DETAILS and VALUE PROP

• No public comments from either side about sale
• I expand on value prop below

 

🤔WHAT ELSE I FIND INTERESTING & DEAL INSIGHTS

 

Estimating valuation…

The seller dynamics around the sale signal that Vidcon likely didn’t command a premium valuation.

• Attendance is down from previous peak
• Vidcon Baltimore was canceled
• Rumors of lack of profitability despite some revenue scale, which raises concerns about overall business model and cost structure
• Paramount facing much more material issues in core business (massive linear TV decline, high costs of Paramount+ vs slow revenue growth), and is going through its own sale to Skybound, which means Paramount is very distracted and not focused on a subscale sale of a non-core events biz

But before estimating valuation, it also makes sense to look at buyer and macro market dynamics…

• Informa has track record and mandate to continue growing through M&A
• Informa has sufficient cash on balance sheet to transact
• This deal is very small for Informa, won’t move needle for them
• Informa events biz is growing quickly, and a priority is its Fan Expo segment
• The overall market revenue opportunity for premium B2B live events has strong tailwinds
• Creator Economy industry overall is growing quickly, and while there’s increasing creator-focused events competition from Premium exhibitors like Cannes, SXSW and TwitchCon, there’s still tons of white space, particularly in better serving the B2B community

Considering the above points, along with the combination logic I expand on below, means Informa is likely a good home for Vidcon. But I wouldn’t expect them to pay much of a premium.

Valuation Math Based on Current Market Cap and 1H 2024 Financials:

• Mkt Cap: £11.3B 
• C&CE: £242M
• LT Debt: £1.7B 
• Enterprise value: £12.8 (Mkt cap + debt – cash)

Based on Informa’s 2024 revenue guidance of £3.5B, that’s a 3.7x EV / forward revenue multiple. Assuming 2023’s 30% EBITDA margin is same for 2024, that puts adj EBITDA at £1.05B and implies a 12x EV / forward adj EBITDA multiple.

Now let’s combine these valuation benchmarks, along with seller/buyer/macro dynamics, to estimate the deal valuation…

Let’s assume growjo.com’s $18M revenue estimate is for FY 2024, and that Vidcon’s normalized adj EBITDA margin is 10% after initial cost synergies from combination (up from a loss), making Vidcon 2024 adj EBITDA $1.8M.

My guess is that the revenue multiple range for Vidcon based on the above dynamics is in the 0.5 to 1.5x revenue range, which is a $9M to $27M enterprise value. To narrow this range a bit more, I would expect a multiple of 5-10x of normalized EBITDA, a discount to Informa’s 12x adj EBITDA multiple so that the transaction is accretive, which implies $9 to $18M enterprise value.

I think this latter range feels right. 

TBD what the consideration mix is; it could be 50% upfront cash plus 50% of Informa stock to minimize Paramount’s tax obligations. But if Paramount just wanted an all cash deal to keep structure simple and pay down debt (which is my guess), I can see Paramount taking an offer price closer to $10M or even below to get a deal done quickly and call it a day.

 

The implied combination logic is compelling…

Informa has a massive exhibition portfolio across global markets, that serves diverse audiences and fandoms. The company has built tried-and-true systems to promote, produce, and monetize its events, and to do so repeatedly and profitably. The same goes for Informa’s knowledge and learning services business, where it provides research/data/insights to professionals and businesses.

Leveraging these systems and know-how, there is considerable upside for Vidcon to provide more premium services and experiences for the creator economy and its B2B and B2C communities. Which will in turn drive more Vidcon global attendance, create more and new inventory for brand and partner activations, and enable new business knowledge and learning-based business models. 

Further, there are clear revenue and cost synergies in consolidation. As part of a broader events portfolio at Informa, Vidcon benefits from a model that likely includes shared and dedicated staff, and where ticket sales/partner activations/knowledge products can be cross-promoted amongst the various events based on audience affinities and interest mapping.

Of course, all fandoms have unique cultural identities and norms. Which drive how creators / audiences / business pros interact with one another, and do business together. 

Creator economy pros know this well, where on the surface each social media or community platform may look the same to casual users. But the reality is that each platform, whether YouTube / Instagram / TikTok / Twitch / Reddit / Discord / et al, is wildly distinct. 

Each are comprised of unique business models, feature sets, platform rep-to-creator relationships and history, engagement norms between creators and audiences, on and off platform behavioral flows, talent characteristics, business ecosystems built around the platform, dealmaking norms, etc. 

This is key to understand for the exhibition businesses, which service these fandoms and communities. Which likely explains why Informa created its Fan Expo brand, recognizing that Toronto Comicon and MegaCon are wildly different experiences vs Black Hat Briefings or Game Developers Conference, vs Salesforce’s Dreamforce or Slack’s Develop Conference.

The exhibition goals are different, and so must be the means to those ends. 

I’m therefore very curious what Informa has learned about delighting and maintaining fandoms and across its Fan Expo portfolio, all while driving towards growth and financial wins. 

 

Key questions I think about for event organizers in general, and specifically for Vidcon within Informa…

• How are key event influencers, like founders or early leadership, best leveraged? Must they continue to be attached, even if just as figureheads? Or does this keep the event experience and identity stuck in the past?
• Which Vidcon attendee track does Informa believe has the greatest revenue potential, and will be its initial focus? My guess is B2B, aka those who are building and doing business around the creator economy. Will it make sense to create a separate B2B track vs the creator and fan tracks?
• What is the calculation for what event experiences and audiences can be sacrificed / diluted over time against the goals of growth and scale?
• Which Informa events have the most audience and partner overlap with Vidcon? What is the best way to cross promote one another? Will it make sense to combine Vidcon with any other Informa exhibitions?
• Building on the above point, will Vidcon be a good platform to rollup other creator-focused events like VidSummit? Is Informa planning additional M&A to land-grab this market? Or does it see Vidcon as the tentpole brand that it can organically expand from by leveraging its existing event knowhow and resources?
• What is the best benchmark / market comp for Vidcon, which informs how Vidcon can revitalize its event brand and grow? Is that benchmark in the Informa portfolio, or elsewhere?
• Is there a large opportunity for Vidcon Now to expand is B2B learning services? Would customers pay for more premium on-demand programming? What would be the vision here? To seriously make a run here, what type of team is needed, and what type of programming and creator pros would be the initial target for a go-to-market?
• What teams should be dedicated to Vidcon VS shared with the broader Informa portfolio? Likely Vidcon leveraged the Paramount sales team, which wasn’t focused on the event inventory. Informa’s global sales team, with many existing event sponsor relationships and knowledge of the audiences they want to target, could likely drive immediate revenue wins to Vidcon.
• What are the immediate cost synergies to realize? If unprofitability rumors are true, likely a great opportunity to reduce big-ticket venue fees, event production, and labor / union costs through renegotiations. 

 

My quick POV and recommendations, with a focus on the B2B experience…

• The biggest opportunity is on better serving the B2B audience. There’s more wallet share to tap into, and you’ll recruit new B2B advertisers and command larger campaign budgets.  
• Stop having the B2B track compete with Cannes. Find a new date. Cannes owns that week, and people don’t want to travel to Cannes and then Vidcon, or vice versa.
• Move the flagship B2B track out of Anaheim. Put it in a premium US city that’s easy to get to and desirable. LA for flagship event feels like a no brainer; it’s the creator economy epicenter and has premium hotels and dining that big spenders expect. For other US events target NYC, Vegas, Miami, Nashville, Chicago. Maybe there’s still opportunity in Austin too?
• Improve the programming by doing less and going deeper / more premium. 45 minute panels with 6 speakers and a moderator are a terrible experience for attendees. Nothing interesting gets said. Go deeper with few speakers, and ask for more from bigger names e.g. prepping 20-30 min presentations with unique findings about creator businesses and capital flows.
• Host smaller, premium networking events throughout the year. For execs like c-suites, founders, investors. Put it under a new Vidcon brand banner. Host them in global premium destinations like London, Dubai, Tokyo. There’s big demand for these. I know, because I’m hosting some! Though I’d love to get invited to others that “VidVIP” hosts (feel free to use that name).
• Connect me to other events in other countries / cities that make sense based on my biz goals and interests, and where other Vidcon attendees are spending time. Informa should be great at this with their master event CRM…I want to ramp up my conference attendance in 2025, pls help guide me!
• …have any other ideas? DM me…

 

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I’m the founder of RockWater Industries. We do financial and strategy advisory for media, agencies, and creator economy. From M&A and fundraising to consumer research and go-to-market planning. 

DM me on LinkedIn or email me chris @ wearerockwater dot com