Metropolis Group, of the UK, has acquired the financial information division of Centaur Media for £5m in cash. The deal involves the advertising-led Money Marketing and Mortgage Strategy, and the subscriptions-based Platforum, Taxbriefs and Headline Money.
The five brands made 2018 operating profit of £1.2m on revenues of £8.2m. The revenue (some one-third of which is accounted for by subscriptions) has declined by 15% over the past two years, while profit has increased by 50%. But the acquisition price is less than the £8m Centaur paid 8-9 years ago only for the subscription businesses Platforum and TaxBriefs.
The divestment is the first of a series planned by Centaur (including its exhibitions and legal publishing) which will leave the company focused solely on the marketing services sector where its key brands include Marketing Week, Festival of Marketing, Oystercatchers, and eConsultancy.
The inevitable problems in conducting 4-5 auctions concurrently include the implied need to sell each group of assets at the best price on offer, almost whatever it is. Some deals may inevitably defy the forecasts and disappoint shareholders.
This deal serves to highlight the growth of the 25-year-old Metropolis Group which has acquired a succession of (mainly B2B) magazine-centric businesses in the UK for prices that are seldom outside the range of 4-5 x EBITDA. The company now owns some 35 B2B brands, almost one-third of which (including Local Government Chronicle, Construction News, and Nursing Times) were acquired from Ascential for £23.5m in 2017 @ 3.4 x EBITDA. The tight pricing (and clear website guidelines for those wishing to sell businesses to Metropolis) seem appropriate for a company majority owned by a fund manager, ex Bain and Schroder’s executive Jonathan Mills, and it’s working.
The company’s last reported revenue was £43.6m with EBITDA of £7.7m. The former Ascential brands produced £4.6m of that profit – just for their first seven months under Metropolis ownership, which may make the purchase price a full-year multiple of less than 3 x EBITDA. Another steal.Metropolis self-describes as “a fast growing group that specialises in business & consumer media and discount & loyalty programmes (Smartsave).” It employs some 500 people and has offices in the UK, Ireland and the US.
CEO Robert Marr is building a strong media company. When he was appointed in 2012, 80% of the revenue was print advertising, today it has flipped to just 20%. A further 20% and 40% come respectively from digital and events, its strongest growth areas. It is not the first company to specialise in exploiting potential of acquiring unwanted assets from impatient larger companies with better things to do. Also in the UK, Mark Allen‘s opportunism has been masterly.
While print is undeniably in systemic decline, many B2B magazine brands continue to be great platforms from which to launch digital media and events.Presumably, Metropolis Group itself will eventually be sold-off or IPOd in order to maximise the return for its investor-owners. But, then, a bunch of “unwanted” B2B magazines are providing a pretty good flow of profits for their hedge funds so there may be many more low-cost deals yet.
