Case Blog

In one of my earliest postings in September of ‘07, Global Brands, I wrote: “As we transition to a digital world, managing our brands becomes ever more demanding. Microsoft, which has done wonders with the Windows and Office brands, stumbled as they tried to rebrand Hotmail, IM and Search under the Windows Live brand. I am certain that with their unlimited resources they employed several of the best branding agencies in the business, but they still struggled through this transition. Those of us who come to this with much less in the way of outside assistance must clearly understand that we need brands that can travel globally…All of us in the B2B or B2C space tasked with transitioning to the digital world are looking for the Holy Grail, an umbrella brand that inspires confidence and trust and at the same time can support many vertical channels. Strategy sessions and market tests play an important role in this process. Marketing dollars invested in branding will yield significant returns, although without strong digital brands there is not much chance of survival for print brands, even those with storied histories.”

In the fall of ‘07, my partners at Austin Ventures and I were still in the search mode to find a platform that we could acquire and grow.  It was almost a year later when we zeroed in on the institutional financial sector, with a focus on asset management. In fairly short order, we acquired Asset International, The Trade, and Strategic Insight.

We decided that we would operate under the Asset International name, as it provided a very clear brand and would allow us to add significant brands under the Asset International umbrella. Today we have established a new London office for Strategic Insight to support the Simfund Global database and analytics platform. In the next several months we will open a comparable office in Hong Kong for our expanding client base to support these well-known business intelligence products and services. This client base historically has been composed of mutual fund companies, but recently we have seen it expand in the U.S. to include other business sectors, including private equity firms that have a strong interest in the financial sector.

In addition, this past spring we launched Plan Sponsor Europe out of London. With this very strong retirement-focused brand and its print, online, research reports, and conference components, Plan Sponsor Europe is offering longtime clients like State Street (STT) a known brand to support their defined contribution efforts in the United Kingdom and on the continent. They have reserved our prime real estate, our back cover, to deliver their message for the balance of the year. In ‘11 we will launch Plan Sponsor Asia/Pacific edition. Recently, Global Custodian released its 2010 Prime Brokerage Survey, which received wide coverage in the business press and was quickly established as the standard for this segment of the industry. This brand, along with Strategic Insight, has had a global impact for more than 20 years.

The TRADE expanded its business several years ago by launching The TRADE Asia and this year launched The TRADE Growth Markets. They also expanded their global web presence with www.thetradenews.com. Finally, ai5000, which focuses on the professional information needs of the Chief Investment Officers of the largest global assets owners, launched their Chief Investment Officer Summit (CIOS) in New York and will hold the second summit in London on October 7th and 8th.

We will continue to expand our business by investing in our core brands on a global basis and serving the needs of our client base in the major markets they operate in.

You can learn more about our global brands and how they can assist you build your global market share by going to www.assetinternational.com.

This is a guest blog post by Jason Cassidy, Asset International’s Senior Vice President of Strategy and Development.

By Jason Cassidy

The barber shop where I get my best insight on the economy, the local plumber who received many phone calls from my wife when I tried to remodel our bathroom myself, and the doctor who gets a lot of business from my 4 year old and 2 year old during cold and flu season are just 3 of the over 20 million small businesses in the U.S. with fewer than 20 employees, according to the US Census Bureau. At Asset International we have several categories of small businesses as customers. For example, we have plan advisers who in many cases are 1-person companies. We also have plan sponsors who in many cases are also the owners of small companies.

Small businesses need information but they also need tools and services to help them be more efficient. At its core, a small business wants to take care of its customers and employees and make money in the process–just as any large corporation. However, specialization in a small business may not exist. The same person responsible for choosing the company health plan may also manage the marketing budget. Companies serving small businesses need to keep this in mind and think more broadly about what products and services we can provide. Our small business customers not only need information about the financial markets but also need tips on how to acquire more customers or set up a billing system.

Because the person who is choosing the 401K provider has a lot of other things to do during the day, that person can not be expected to be an expert in all the nuances of being a plan sponsor and certainly does not have the staff to do analysis for them. We need to make access to information quick and easy and add service wherever possible. As well, small businesses do not have large budgets for research on the best 401K provider, for instance, so we need to create high value, low-cost options. We and other companies that cater to small businesses should think high volume, high value, quick and easy, and low cost. Asset International and other companies serving small businesses need to keep in mind that what we are trying to do is help small businesses grow.

About Jason Cassidy, Asset International’s Senior Vice President of Strategy and Development.

Prior to joining Asset International, Mr. Cassidy was Vice President of website solutions for Register.com, where he oversaw sales, operations, customer service, marketing and product management with the primary focus on small business customers. Previously, as Vice President of Reed Business Information, he was actively involved in global strategy and development, including M&A initiatives and international development, and managed a portfolio of websites. Mr. Cassidy earned an M.B.A. from Duke Fuqua School of Business (2007) and an A.B. from Harvard University (1998). Originally from Boston, he and his family reside in Staten Island, New York.

As we celebrate Labor Day in the Bay Area, it is clear that summer is coming to an end. I returned to Blackhawk from a week in London, where Gordon Brown and the Labour Party continue to surprise me by still surviving. It looks like Brown will make it until he must call for an election in the spring.

We are evaluating several acquisitions for further expansion in London. In addition, organic growth through global expansion is also a priority. Information needs around pensions are still significant, as plans continue to recover from last year’s stock market debacle. Under Nevin Adams’ editorial leadership we will launch the well-respected Plan Sponsor brand in the United Kingdom and continental Europe. I sense that New York and London will remain the primary global money centers and we need to have a significant presence in each market. Commercial real estate offers similar opportunities to New York and we plan to consolidate our presence in a new headquarters in The City.

Many of London’s private equity players and their bank sponsors are working on restructuring plans. I was interested to see that the Royal Bank of Scotland and Apax have reached an agreement to split Incisive Media. RBS will take a controlling interest in the UK assets of Incisive, while Apax will still control the U.S. based ALM, which was under a separate financial structure with very different covenant requirements. The media industry will continue to be deleveraged throughout the fall, particularly in the newspaper sector.

Mary Claire and I will enjoy several last rounds of summer golf this weekend, and then she will return to New York while I head to Hong Kong, Beijing and Shanghai. In Hong Kong we will attend SWIFT’s Sibos 2009. It is a large conference and exhibition and for many it is one of the financial services industry’s major events. Last year in Vienna it drew over 8,000 attendees. We will be introducing Asset International’s growing portfolio of products and services, including our most recent acquisition, Strategic Insight. Charlie Ruffel and Dominic Hobson will host the event during this 20th anniversary year for Global Custodian.  The Trade’s editorial team (we acquired The Trade in June) under John Lee’s leadership will be producing the show dailies, which they have done for close to 10 years.  We will be looking for opportunities to further expand our footprint in this fast-growing region, which appears to be recovering at a faster pace than the west.

Fall has also given us the return of the football season in the U.S. The biggest upset of this inaugural weekend of college football was the #20 Brigham Young Cougars beating the #3 Oklahoma Sooners, who with their Heisman Trophy winner Sam Bradford had their eye on a national championship before last evening. Max Hall, the talented quarterback of BYU, clearly established the Cougars as a contender for a major BCS bowl game, in spite of playing in the Mountain West conference, one that is not insured of BCS Bowl representation.

At the start of this long Memorial Day weekend, it is clear that with spring we saw some “green shoots” and sensed that we had most likely touched bottom in this deep recession in February or March. Confidence has slowly returned with regards to our financial system and the strongest banks are in the midst of negotiating with Treasury Secretary Geithner on when they can repay the TARP funds. Our credit system has slowly defrosted as well. As we move toward summer, we will start to hear more and more about possible debt swaps, done at significant discounts, from overleveraged private equity deals that have survived but are still searching for a way forward. While my focus is on the media sector, this process has started across all sectors of the economy.

Back in October, I wrote in A Family’s & an Industry’s Conundrum about the depressed newspaper industry, with a focus on the New York Times Company (NYT) and the McClatchy Company (MNI), both family controlled, longtime publishers. Since that time both of them have seen their fortunes worsen as the advertising free fall from November to February left both of them in significantly worse financial shape than they were in the early fall.

McClatchy announced earlier in the week that they are pursuing a debt swap at a significant discount. (WSJ May 22, 2009) They have asked bondholders of $1.15B of their debt to take equity stakes that equate to a range of $.18-$.33 on the dollar, varying by issues they hold and how quickly they agree to the terms. If they are successful, McClatchy could lower its debt load by as much as $500M and, most importantly, gain three years to repay the bonds that currently come due in 2011. Together with the significant cutbacks in fixed costs they have already made, this “reset” could give them the breathing room they need to reinvent their news franchises across the country.

While radio appeared to be surviving as a medium better than the newspaper sector, the deepening recession showed us that this was not the case. Last year in a much-publicized deal, Bain Capital LLC and Thomas H. Lee Partners LP finally took Clear Channel, a public company controlled by the Mays family, private. The deal was protracted, and in the end the company went private at a slightly reduced price per share with a debt load of $22B, compared to its $5.9B debt load when it operated as a public company. Clear Channel’s radio business experienced a 22% decline in advertising revenue in the first quarter of ‘09. (WSJ May 11, 2009) As part of their effort to reduce costs, they have had significant layoffs and suspended their 401K matching contribution. This has been a common response to the current recession by overleveraged companies across all sectors. Nevin Adams, editor-in-chief of PlanSponsor, has chronicled many of these 401K matching contribution suspensions in his daily, NewsDash. It has been widely reported in the business press that the two private equity sponsors are now trying to negotiate a debt swap to avoid violating loan covenants later in the year. The New York Post reported that the initial proposal has been rejected by two of the senior lenders. (NY Post May 22, 2009)

At the end of the day, I sense that both of these debt swaps will get done with some modifications. As the economic recovery takes place, both businesses will have bought some time to move from an analog to a digital strategy that will allow them to survive, although as much less dominant national players then they were prior to this recession. Advertising dollars are starting to be spent again, and we should not lose sight of the fact that Google emerged dramatically from the last recession. There is tremendous leverage in the advertising/marketing spend, but yesterday’s dominant players do not always emerge as the tomorrow’s leaders.

I spent most of last week in London, where Gordon Brown’s government remains under pressure from the Tories to call for a new election. The expense scandal that engulfed the House of Commons while I was there certainly has not strengthened Labour’s hand to resist. Just as we saw the Democrats and President Obama take over from eight years of Republican control of the White House, I sense that the Tories’ time is near after more then 10 years of Labour’s dominance during the Blair years and the current Brown term.

I have noticed during the past two recessions, where I have had a unique window into both the U.S. and UK advertising markets, that British companies do not move to cut their marketing spend as dramatically as their U.S. counterparts. I trust that this serves them well during the recovery, where the strongest companies can gain very profitable market share. There is a lesson for U.S. marketers in this strategy.

It is crunch time for the Division I men’s college basketball teams. With “Selection Sunday” looming large on March 15th, teams on the bubble need to make their move.  Rivals.com has just published its projections for the field of 65. Penn State, Kentucky, Cincinnati and Miami are currently the last four in. Virginia Tech, Maryland, Michigan and Temple are currently the last four out. Michigan improved its chances for a bid this week with a win over #16 Purdue.

The projected #1 seeds are North Carolina, Connecticut, Pittsburgh and Oklahoma. The projected #2 seeds are Louisville, Michigan State, Duke and Memphis. Will the projected 9th seed Boston College be a Cinderella team with its wins over North Carolina, Duke and Florida State, or will the team that lost to Harvard show up at tourney time?  Over the years, the lead-up to the tournament has become a sign that spring is almost here and another winter behind us.

After an exciting finish by Phil Mickelson (will he hold on or will he self destruct?) last Sunday at the Northern Trust PGA event at the Riviera Country Club in Los Angeles, their was an uproar in the press and the halls of Congress over Northern Trust’s sponsorship and entertaining during the event. On Friday, Northern Trust CEO Frederick Waddell responded in a letter to Congressman Frank, chairman of the House Financial Services Committee, and 17 other members of Congress.  While stating that Northern Trust understood that this is a time of great financial uncertainty, Waddell defended the sponsorship and pointed out that “the event has raised more than $50M for charity since its inception.”  Northern Trust (NTRS) remains profitable and has announced that it will return the $1.6B in TARP funds, with interest, as soon as it can replace it with private capital. I sense that they will not be alone. Healthy financial institutions would like to make their own decisions on appropriate marketing activities as they have in the past, which I fully support. Those of us who plan events as an important part of our product and service offerings need to be extra sensitive in the current climate when we select venues.

On Sunday evening in Los Angeles the 81st Academy Awards took place at the Kodak Theatre, just down the road from the Riviera Country Club.  Slumdog Millionaire walked off with 8 Oscars! The movie captured the dichotomy of Mumbai, India, with its poverty juxtaposed against the growth of the city that took place over the last decade. Slumdog Millionaire managed to capture the spirit and determination of the people of Mumbai.

We held Asset International’s first global sales meeting this week and laid out our growth plans to the sales teams from London, New York and Stamford, which represent their respective markets, Global Custodian, Plan Adviser and Plan Sponsor. The meeting ended with a real enthusiasm for our global vision and a real sense of team. This will serve us well as we prepare to launch The 5000 in late April.

Later this week, Mary Claire and I will head to our home in Blackhawk to get an early feel for spring. I know we will be sharing our Kindle 2 on the flight. If you have not already done so, you should go to www.amazon.com and take a tour of the latest Kindle. For those of us who love to read, this is a must-have platform. It demonstrates that the digital transformation is at hand. I marvel that it can hold a library of 1,500 books, and its capability for wireless downloads is truly impressive.

While we are in Blackhawk, I will have the opportunity during a round or two of golf with my friend and golf partner, George Riggs, a longtime newspaper executive who recently retired, to share thoughts and insights on the perilous state of the newspaper industry. The two Philadelphia papers that Brian Tierney acquired with a group of investors from McClatchy (MNI $.49  2/27/09) as part of the Knight-Ridder transaction filed for bankruptcy this past week. This was quickly followed by an announcement from Hearst that the San Francisco Chronicle, which lost $50M+ this past year, will have to find a path to profitability, be sold or  be shut down.  Finally later in the week, Scripps (SSP), which had made a similar announcement to Hearst earlier, followed through and shut down the storied Rocky Mountain News.

We are starting to see all of the overleveraged newspaper properties headed toward bankruptcy filings as they try to deleverage. And those properties that are still seeking a viable new model and have healthy, diversified media company parents are finding out that their owners’ patience is coming to an end. Will there be an investment opportunity found in the rubble when the dust settles, or has the digital divide left newspapers behind? Is there brand equity left that will allow new models, with low overhead and debt, to thrive during an economic recovery?

The current financial crisis, which has resulted in the worst recession since World War II, will come to an end when confidence is restored in our global financial institutions.  Treasury Secretary Tim Geithner learned very quickly last week that the markets want more than a blueprint, they want a specific plan that will lead to the balance sheets of our largest money center banks being healthy and the subprime toxic assets isolated.  He and his colleagues in the Obama administration need to come forward with a transparent plan that starts to restore confidence.  The need for transparency is greater than at any time in recent memory and it must be combined with a plan that provides decisive actions.

We also need the Obama team to start to demonstrate some optimism that there will be a recovery. On January 9th, 1961 President-Elect John F. Kennedy inspired a nation with such optimism in a speech delivered to the Joint Convention of the General Court of the Commonwealth of Massachusetts.  He said, “During the last sixty days, I have been at the task of constructing an administration. It has been a long and deliberate process. Some have counseled greater speed. Others have counseled more expedient tests. But I have been guided by the standard John Winthrop set before his shipmates on the flagship Arbella three hundred and thirty-one years ago, as they, too, faced the task of building a new government on a perilous frontier. ‘We must always consider,’ he said, ’that we shall be as a city upon a hill–the eyes of all people are upon us.’  Today the eyes of all people are truly upon us–and our governments, in every branch, at every level, national, state and local, must be as a city upon a hill–constructed and inhabited by men aware of their great trust and their great responsibilities.”

President Ronald Reagan in his farewell speech on January 11th, 1989 also spoke of the “shining city upon a hill.” He said, “And that’s about all I have to say tonight. Except for one thing. The past few days when I’ve been at that window upstairs, I’ve thought a bit of the ‘shining city upon a hill.’ The phrase comes from John Winthrop, who wrote it to describe the America he imagined. What he imagined was important…I’ve spoken of the shining city all my political life, but I don’t know if I ever quite communicated what I saw when I said it. But in my mind it was a tall proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace, a city with free ports that hummed with commerce and creativity, and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That’s how I saw it and see it still.”

President Obama has both the mandate and the oratorical skills to help restore a sense of confidence and optimism. He needs to communicate directly with the American people that we will find our way to a recovery.

In our own small way the team at Asset International works every day to provide transparency to our readers.  Nevin Adams, the editor-in-chief of Plan Sponsor (www.plansponsor.com), provides the leadership to our editorial team and encourages them to deal, forthrightly, with issues of the day and how they impact both plan design and investment strategies.  Nevin, as most of the best business editors I have known, came to Asset International from an industry position. This background provides him with a unique vantage point and insures that Plan Sponsor is a “must read” and a trusted information source for our subscribers.

On the deal front, we saw John Malone and Liberty emerge as a possible white knight for Sirius XM. As the first major tranche of bonds come due on Tuesday, Mel Karmazin and his board will have to make a decision on Charlie Ergen and the Dish Network, John Malone and DirecTV, or bankruptcy. As a subscriber, I am assuming that any of these options will allow me to continue to listen to CNBC as I drive to and from AI’s offices in Stamford.