Comdex future gets blurry

LAS VEGAS -- Exactly what will happen to Comdex next year might be good fodder for this city's oddsmakers, but there was one sure bet at the end of last week's scaled-down show.

Financially troubled Key3Media Group Inc. likely won't be the producer of the IT industry's premier trade event. The Los Angeles-based company is trying to sell its assets, and assuming that effort is successful, a new owner will determine the show's future.

The uncertain status is causing some vendors to hold back from committing to next year's event.

"Nobody wants to give them a check if they're going to lose money," said one official at a hardware vendor who asked not to be identified. "You don't want to see them spend it on lawyers in bankruptcy court."

And the declining number of exhibitors is already causing some attendees to reassess the value of the show.

Eric Walker, assistant MIS director at the Arkansas Department of Parks & Tourism, said he was disappointed. "What I was expecting to see—these big, major companies—just wasn't there," he said.

James Grettum, a partner at Grettum and Co. in Fargo, N.D., said he has attended Comdex for at least 15 years, but he probably won't come next year. "I thought last year's show was really slow, and this year's is a lot worse. This year, it just isn't that exciting," he said.

But the show itself will be back here next year, according to Fredric Rosen, chairman of Key3Media. He said the goal is to sell all of his firm's conference brands, which include Comdex, NetWorld+Interop and Seybold, to "one strong buyer." Companies in the trade show, publishing and financial industries are being viewed as potential buyers, he said (see story).

Steve Wilkinson, a financial analyst at Standard & Poor's, said he expects there will be interest, since Key3Media assets "are still pretty good." He said the company's vulnerability stems from its debt, not the viability of its most popular shows.

Wilkinson added that he would be surprised if Comdex didn't continue to be a fairly large trade show. "It's just a question of the size relative to what it used to be," he said.

Just days before Comdex opened last week, Key3Media announced a $315.7 million net loss for the third quarter and confirmed that besides the restructuring and sell-off, it's also considering filing for Chapter 11 bankruptcy protection, though Rosen said "no filing is anticipated shortly."

The technology sector's downturn has kept Key3Media from making much progress in paying off the $400 million in debt it inherited when it spun off from Ziff Davis Inc. in August 2000, Rosen said.

Key3Media's sales force was aggressively working last week to sell space for next year's show, which is slated to run for four days, Nov. 17-20, rather than the traditional five. The firm holds a long-term lease with the Las Vegas Convention and Visitors Authority, Key3Media executives said.

Rosen said his company will work with vendors that may be worried about committing to buy exhibit space at next year's show because of Key3Media's unsettled status. He said he has told his staff to "be sensitive to the needs of clients," including the normal deadlines for commitments.

"Companies want to commit," Rosen said. "They just want to make sure they're committing to a stable entity."

Rosen said Comdex is a profitable show, despite this year's declines in exhibitors and exhibition space. He said the firm's current difficulties wouldn't exist were it not for the debt burden it has been carrying during tough economic times.

In any event, several attendees and vendors said they still saw value this year, despite the scaled-down show.

Frederick Badiali, a senior account executive at Westinghouse Electric Co. in Monroeville, Pa., said attendees generally were more knowledgeable and serious about finding good business and technical products because of their limited budgets. He said the economy "weeded out a lot of people who were not interested in technology."

The Fall of Comdex/Fall
1995 1,294,401 2,318 210,000
1996 1,351,281 2,100 216,300
1997 1,382,400 2,480 211,886
1998 1,380,000 2,482 206,332
1999 1,155,000 2,134 200,000
2000 1,187,000 2,337 211,625
2001 800,000 1,685 125,000
2002 Not available 1,100 (estimate) Not available

Source: Key3Media Group Inc., Los Angeles

Copyright © 2002 IDG Communications, Inc.

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