PA Media Group, the UK news and information company formerly known as the Press Association, has acquired the 21-year-old, privately-owned Alamy photo library for a price believed to be almost £35m, equivalent to 8 x EBITDA. Alamy has an archive of almost 200m images and videos, sourced from a network of 100k photographers and 650 picture agencies, which upload more than 100k new images daily to its high-rated online platform.
Although Alamy is UK-based, 65% of its £25m revenue comes from international markets including more than 40% from the US, AsiaPacific and India. It is said to have almost 100k customers in media and advertising across 150 countries. It complements the PA Images library which has 20m photographs online charting more than 100 years of British history through news, entertainment, sport and the country’s Royal family.
The acquisition is ground-breaking for PA and not just because Alamy has 15-20% profit margins. It will increase group revenue and profit by at least 30% and internationalise PA, which will now derive more than 25% of revenue from outside the UK.
The Press Association was founded in 1868 (22 years after the launch of Associated Press in the US) by British daily newspaper proprietors who wanted a more reliable alternative to the monopoly service of telegraph companies. Its first press telegram was actually sent 150 years ago last week, after its founders had declared: “The Press Association is formed on the principle of co-operation and can never be worked for individual profit, or become exclusive in its character”. It once owned Reuters.
PA is owned by some 20 UK media companies including Reach, News Corp, DMGT, Telegraph Media Group, and Informa, but is no longer just the country’s national news agency.
PA is an increasingly diversified news and information group which increased revenue by 17% and more than doubled adjusted operating profit during 2014-18. In 2018, it had operating profit of £8.4m (2017: £6.2m) on revenue of £70.2m (62.3m). That’s a level of growth during disrupted times that most of PA’s newspaper-centric shareholders can only dream about for their own businesses. But it also reflects a stunning transformation.
A decade ago, the majority of PA revenue still came from its traditional news wire services for UK and Irish newspapers. By 2016, with its newspaper customers in sharp decline, PA was still getting 39% of revenue from those traditional services. But it was rapidly growing new businesses.
Last year, the news services accounted for just 26% of PA. In 2020, with Alamy bringing in at least 26% of the expected £100m+ revenue, the news service share will be down to 18%. The remaining 56% will come from leisure and sports content, betting data, and from a clutch of companies including Sticky Content (digital content marketing), Globelynx (a network of experts remotely interviewable on TV), StreamAMG (sports streaming), EBS (data for electronic programme guides), and TNR (communications consultancy). Along the way, it has bought and built what is claimed to be Europe’s leading media, journalism and PR training company. These subsidiaries have been acquired, during the last 10 years, from the £150m proceeds of PA’s sale of the Meteo weather group and its 50% stake in Canada Newswire.
It’s a neat strategic pattern which was followed last year by the sale of the company’s London headquarters for some £40m which wiped out PA’s longtime pension deficit and armed it now to acquire Alamy.
It’s a big change from 2010 when the Press Association had a pension deficit of up to £20m, double the headcount of 2020, and sliding profits. That was the year when PA was reeling from profit lost from the closure of two London evening newspapers and from the collapse of the UK’s once so powerful Teletext service. It was also the year when PA’s CEO Clive Marshall and its non-executive chair Murdoch MacLennan (then CEO of Telegraph Media Group) were appointed.
Marshall, who had once been commercial director of PA as well as CEO of its Australian counterpart, has built the “new” company not least by making it a welcoming, flexible home for a diverse range of entrepreneurial media content businesses. Like Hearst, Axel Springer, and DMGT, PA has been able to convert learn-as-you-go investments into significant acquisitions through light-touch management – and staying away from high-priced auctions.
Not all its deals have been successful. But you cannot find an executive or entrepreneur who has not been impressed by the culture and team spirit of PA. And it’s not just the sellers of companies who are fans.
In its 10 years of transformation, PA’s newspaper customers have lost most of their advertising and many of their readers. But its shareholder companies have enjoyed more than £80m of dividends from a growing media services group which may now be worth almost £200m.
The recently launched PA Betting Services – “a one-stop destination for multimedia betting content and services for existing customers and key target markets like the USA and Africa” – makes the point that PA’s international ambitions are not limited to the acquisition of Alamy. Sports and betting accounted for some 25% of PA’s revenue in 2019.
But the key to the future of the company’s core news, sports and lifestyle content services must be in the bumpy re-invention of the news industry itself. While some quality news brands are starting to glimpse a sustainable business model, national, regional and local news might increasingly be dominated by three types of provider:
- Non-profit and voluntary organisations
- Corporates providing added-value services for customers
- New-style, low-cost news brands
Each of these categories of news provider (whether in print, video, broadcast or digital text) could address the industry’s current challenges of viability and dependability. They would also present growth opportunities for PA as a ‘wholesaler’ of multi-platform content, not least to the corporates which already account for some 15-20% of revenue.
It is almost 20 years since the UK’s Channel 4 Television was launched as a “publisher broadcaster”, a new-style commissioner and buyer, not a traditional maker of programmes. That approach may be the future of many newspaper-centric brands which could combine small staff teams with content services from PA et al, rather than being large-scale employers of journalists, designers and photographers. Their emphasis would be on curation, branding, marketing and distribution.
Meanwhile, some traditional publishers have the consolation that their inherited shareholdings in a 152-year-old news agency are increasingly valuable. Never too old to change.