As a digital publisher, Relx (REL) should be relatively resilient to the impacts of coronavirus-induced lockdown measures. But the group also comprises an exhibitions business, which puts on major events such as the MIPIM property conference. Amid widespread cancellations and postponements, the outlook for this division - which accounted for 16 per cent of revenue in 2019 - is now "highly uncertain". It follows that Relx has withdrawn its overall guidance for 2020.
Other live event organisers have also seen their programmes cancelled. Ascential (ASCL) has scrapped the Cannes Lions Festival, which broker Peel Hunt anticipates will result in lost revenue of £67m. Hyve (HYVE) has delayed 33 events to later in the financial year, deferred 12 to 2021, and cancelled eight. The company did not guide to an impact on revenue, but management has postponed capital projects, furloughed more than a quarter of UK staff and cancelled the interim dividend. This blow to earnings is, in turn, squeezing the balance sheet. The company has fully drawn £250m of committed debt facilities as well as securing a waiver for covenant tests in June.
Upending 'experience economy'
Lockdown restrictions and social distancing measures have not only cut off key streams of revenue; they have also upended “experience economy” growth strategies - the idea that millennials prefer to spend on experiences, rather than on stuff. Take Time Out (TMO) (for now re-branded as ‘Time In’), which temporarily closed five of its markets in Lisbon and the US in mid-March. The Time Out Market business, which consists of live venues that sell food and drink, is a key initiative for the group - and while net revenues here landed at just £6.6m for the half-year to last June - against total net revenues of £24.7m - this represented significant growth of 72 per cent. The company had expected to open a site in Dubai this year, as well as two others in London by 2021.
Of course, lockdowns could encourage consumers to take part in virtual experiences in place of the real thing. We are already growing accustomed to using software platforms such as Zoom to carry out smaller-scale meetings - albeit an exhibition open to thousands of attendees constitutes rather a different scenario.
In any case, for companies that have historically relied on physical attendance, this is an especially tight spot. Relx and Hyve have planned to delay a number of events until later this year - something that could, feasibly, change, given that at this stage it is impossible to know how long it will be until distancing measures actually lift.
