By Molly Joss February 18, 2003 -- On February 3, Key3Media Group, Inc., the company that owns Seybold Seminars and Seybold Publications, announced that it has a plan to recapitalize its debt of almost $400 million. The announcement comes after several months of rumors that the company was in serious financial straits. Company representatives had stated publicly prior to this past fall’s Comdex (also owned by Key3Media) that the company was considering filing for Chapter 11 bankruptcy protection. Under the bankruptcy plan, which is subject to approval, the private firm Thomas Weisel Capital Partners will control the company. Weisel will also provide $30 million in debtor in-possession financing, which will allow Key3Media to continue to function while it reorganizes. In the fall, Key3Media announced that the annual spring Seybold East event, Seybold NYC (formerly Seybold Boston) would not be held in 2003. The company also announced it would not hold several regional Comdex events. Handoff Seybold Seminars and Seybold Publications are icons in the graphic arts industry, having produced conferences, trade shows and publications for decades. Up until about ten years ago, the company was privately held by the Seybold family and, for many years, led by its founder, John Seybold. Not long after the founder stepped aside, Ziff-Davis bought the company and made it part of ZD Expos. In 1994, Softbank Corporation, Japan’s largest distributor of computer hardware, peripherals and systems, and a major Japanese publisher of computer-related magazines and books purchased ZD Expos. In 1995 Softbank purchased COMDEX and 16 other computer-related expositions and conferences for a record $864 million from founder Sheldon Adelson. A few years ago after Softbank decided to reorganize and sell some of its holdings. Key3Media is the company that emerged to take over the various computer-related events, including the Seybold events and publications. Unfortunately for Key3Media, which inherited millions of dollars in debt that was acquired during the various sales, the business-to-business economy started slowing down about two years ago. Comdex Fall 2002, the company’s flagship event, had roughly half the attendees as previous shows. Booth space rentals were also down sharply over previous events. Reliable sources tell WTT that while the shows remained profitable, they could not be profitable enough to service the millions of dollars in debt. Try as it might, the company would not be able to continue operating with that high of a debt level. Thus, bankruptcy became the company’s most viable option. In our opinion, the company has a difficult road ahead of it. Just a day after Key3Media announced its plans for filing bankruptcy, another computer tradeshow organizer announced its plans for a major computer trade show. Jupitermedia announced it has booked space in Las Vegas next fall to run its trade show at the same time Comdex is scheduled next fall. In order to survive in today’s economy, Seybold will have to do some hard thinking about how to create compelling value for its fall event. That may, indeed, be easier said than done. Looking for some perspective on what happened to Key3Media and some thoughts on what might happen to Seybold, WTT turned to Gene Gable. Gene has been in the graphic arts industry for many years and was president of Seybold Seminars and Publications from February 1999 to October 2002. During that time he produced eight Seybold conferences. Q. What impact do you think the bankruptcy filing will have on Seybold Seminars? GG: It is very difficult signing up exhibitors and getting them to pay in advance when they are worried the show producer will survive. To that, a bankruptcy filing with bridge funds such as Key3Media obtained, might reassure clients. But Seybold has other issues--the graphic arts industry, even when you throw in content management, PDF, on-demand printing and rights management, is struggling more than most. Q. Seybold used to be the trade shows that people attended faithfully each year. Yet, last fall Key3Media announced that Seybold NYC wouldn’t be held anymore. What’s going on? GG: It’s interesting to watch what happens to trade events---they really do reflect trends. For a while, Seybold was completely dominate because it was where everything in graphic arts was turning from analog to digital--very exciting times. But it’s logical that once each segment, like page-layout, illustration, photography, prepress, printing, etc., turned digital, that people would go back to their own communities with their own events. Q. What does the future hold for Seybold? GG: I think the future can be fine for Seybold, but it’s going to be much different this year than in the past--companies don’t have the sort of products anymore that are suited to big booths and lots of flash. What isn’t a commodity product, like printers, scanners, cameras and most software, is a complicated system like content management or data-driven publishing. Those products aren’t suited to trade shows, really, because there’s not a lot to demo--mostly they are customized systems sold after months and months of sales cycle. Trade shows are a great place to see machines, not software. That’s why Graph Expo survives even though the printing industry is hard hit--it’s all those machines on the floor. People come to see things, not to just talk about them." Q. How did Key3Media come to be in such a difficulty money-wise? GG: Key3Media had the same problem Ziff-Davis had when it owned Seybold, Comdex and other events. Because the shows had been sold a few times, the debt was a burden that had little to do with current industry economies. That was fine when things were booming in 1999 and 2000 and we had record events. But in 2001 and 2002, the economy and mood of the industry really took its toll, and despite being profitable, there just wasn’t enough money to make debt payments. Q: What does the future hold for you? GG: As far as me, Molly, I’d simply say that I am currently working on a project to help redefine and quantify the graphic arts marketplace as a component of corporate enterprise. I am also restoring several pieces of vintage letterpress printing and line-casting equipment and starting my own small hobby press imprint. My chronicles of that process will be published twice monthly on Creativepro.com beginning this month.