While the physical world was in lockdown for much of the last 18 months, the business world of deals which underpins global news media has been in overdrive. And that’s a trend that looks set to continue in 2022, according to the expert panel that took part in Press Gazette’s Future of Media Deals webinar – which was presented in association with GlobalData.
Tabby Elwes of CIL management consultants (pictured top right) said: “Digital is where you want to be and that is what is driving investment across all media sectors…
“There has been a slight disconnect between the level of activity which you’ve seen in business and the level of deal-doing that’s been going on while the streets are deserted and we’re all in lockdown. It has been absolutely frenetic with deal after deal. It looks as though it is going to continue to be a highly active market because private equity continues to be very interested in the media space, particularly if it’s got a digital angle or a tech angle.”
Peter Skulimma (pictured above, bottom right), a former news industry executive who now advises media companies for Endava, said: “News has seen a revival.”
And he used an example from his native Germany to underline the huge importance of online content in the corporate world.
“Mercedes Benz is employing more journalists in Germany than the leading consumer car magazine. They have an agency in Berlin with 100 people; a third of them are journalists, a third of them are data scientists and the other third are online marketers.
“As a publisher, if you can position yourself within that content marketing trend that will be a strong thing.”
Asked why news media company valuations are suddenly riding high, GlobalData head of thematic research Cyrus Mewawalla (pictured above, bottom left) offered this explanation:
“Valuations for media sector are set by investors. Ten years ago valuations were related to profits. These days profits are less important, valuations are based on themes. The media industry is transitioning almost to be a tech sector. If you look at advertising it’s moving to adtech. WPP saw their share price go up when they invested in adtech.
“The classic example is Disney. When Disney did not have its own streaming platform the share price went sideways, a couple of years ago when they announced they were going to have their own streaming platform they weren’t going to rely on Netflix and suddenly Disney is back to king.
“Disney always said content was king, but content was not king when it did not have the technology. If the media sector wants to be valued highly it has to become the tech sector.”
Asked what news companies can do to increase their value and have a successful 2022, Tabby Elwes said: “Private equity is very focused on income based on recurring revenue. They want to see manageable churn, so you are keeping and retaining customers. They are very keen on an embedded relationship. Multiple points of contact mean depth of your relationship.
“Digital advertising is important and a high-growth area but you have to show it is based first-party or zero-party data which is resistant to the phasing out of cookie trackers which will happen over the next couple of years. Multiple revenue streams are also important– events, data, awards – that demonstrates you are a risk-tolerant business.
“You need to provide an end-to-end digital experience for your users. Robust data analytics and a personalised experience for your users.”
Mewawalla said: “In media, the tech-enabled businesses are doing really well and those that are a bit behind are doing really badly and that’s a fantastic environment for M&A because the strong companies can buy the weak companies when their valuations are weak. I think we will see a lot of M&A and I think we will see a lot of the wrong M&A such as two weak content companies merging. If you want to do M&A focus on tech.”
Skulimma of Endava concluded: “The biggest challenge is getting the right people in to get this done. Forget about attracting them because these are the people that everyone is looking for right now, so M&A might be a very good way to get the right skilled people in… because otherwise, it will be too slow. You need the game-changers who are not working like you as a publisher or media company are. Focus on people with skills and execution. It is the execution which is killing a lot of initiatives.”