Cleveland – The eight years he spent at Penton Media have been “the best of times, the worst of times” for Tom Kemp, Chairman & CEO. Kemp resigned on March 24. His departure is planned for later this year, to give a search committee time to find his replacement and to ensure an orderly transition with the new executive.
Transforming a Company
At the beginning of his tenure, Kemp led the transformation of the company. When he began as CEO in 1996, Penton was owned by Pittway Corp., a conglomerate that had interests in a number of companies, including IPC, which published a number of magazines in highly specialized markets. Penton and IPC were merged. In 1998, to reflect the evolving focus of the firm into an integrated media business, Kemp led a tax-free spin-off of the combined entity into an independent company named Penton Media, Inc. That same year, Penton went public, listing its stock on the New York Stock Exchange.
The next few years were “glory years” for Penton, which seemed to have the Midas touch. A number of acquisitions helped Penton achieve leadership positions in the natural products and high-technology field. Its Internet World epitomized the times. The show was an immediate success. It grew dramatically, broke one record after another and created innovative and exciting marketing programs that were the envy of the industry. The sky seemed to be the limit. In recognition of his efforts, in 2000 Kemp added the title of Chairman to his CEO designation.
Troubled Years Take Their Toll
The difficult years following the 2001 terrorist attacks, the threatening and then actual recession and the burst of the high-tech bubble—not to mention the high debt load carried by Penton–all took their toll. The drain on the company continued for several years with revenue dropping from nearly $300 million in 1999 to just over $200 million at the end of 2003. EBITDA (earnings before interest, taxes, depreciation and amortization) fell further, slumping from nearly $67 million in 1999 to $25.5 million in 2003. Stock prices fell below the $1 minimum required by NYSE and Penton was delisted last year. It’s now traded on the open market. Stock prices tumbled even further following news of Kemp’s departure, dropping from about 75 cents per share on 3/24/04 to 60 cents at 11:16 a.m. on March 25.
In 2002, Penton entered into an agreement with ABRY Mezzanine Partners for the private placement of 50,000 shares of a new convertible preferred stock and warrants. Proceeds were used to repay the company’s indebtedness. As a result of the transaction, ABRY controls five seats on Penton’s 11-member board of directors.
Kemp says he is proud of his accomplishments during the early years, but he is even prouder of his ability to shepherd the company through the past few extremely difficult years into a position that he says is relatively more stable. “Even though the business is still not booming, it’s been much more stable in the first quarter of 2004 than in the past three years,” says Kemp. “We believe the worst of the financial crises that gripped this company over the past few years are behind us at this point in time,” says Kemp.
What the Future Holds
Ironically, the need for Kemp to utilize his financial acumen seems to have played a part in the decision of the board to accept his resignation. Calls to ABRY Partners were not returned, but industry sources believe that that the need now is for an executive that will focus more on the operational side and help to rebuild the business. Kemp’s future is uncertain, but he says he has been working in b-to-b media for the past 30 years, and it is where his greatest experience has been. “I love the trade show business, and I would hope and expect to stay in the b-to-b media business one way or another,” he says.
Reach Tom Kemp at (216) 931-9979; firstname.lastname@example.org