Media Fortune Fame & Folly

Europe’s ‘secret’ media hungry for growth…

There is a fast-growing European company you may not know, whose news media and digital audiences are almost 50% of their target population. Even its printed newspapers and magazines reach 25% of the total market. In three countries (total population: 35m), its digital reach matches Facebook and Google. It has more than doubled revenue and profit in the last 10 years and has quietly become a major player.

In less than 30 years, the family-owned, Antwerp-based DPG Media has blossomed from a small regional magazine publisher into an almost uniquely diversified group across newspapers, magazines, TV, radio, streaming, and digital media in Belgium, the Netherlands, and Denmark.

DPG (formerly known as De Persgroep) grew up in Belgium whose media and politics are forever complicated by the fact that the 12m-population country is divided into Flanders (the northern Dutch-speaking part, with 7m inhabitants), 5m French-speakers in Wallonia, and a small German-speaking community. Brussels – capital of Belgium and of the European Union – is bilingual French and Dutch.

The fragmented country – sometimes described as “an accident of history” – has generated strong media for people who have traditionally not wanted to share their newspapers, managazines and broadcasting with neighbouring France and the Netherlands.

De Persgroep began in 1987 when the Van Thillo family acquired the Flemish newspapers Het Laatste Nieuws, De Nieuwe Morgen, and De Morgen. They were also one of nine publishers which jointly launched the first commercial TV broadcasters in Flanders. In 2003, the company entered the larger Netherlands market with the acquisition of Amsterdam daily Het Parool which became one of the country’s most visited news sites. It followed up with the acquisition of Dutch radio stations.

The architect of DPG’s 21st century expansion is Christian Van Thillo (now executive chairman) who has worked in the business since 1989 when he completed his MBA in the US. He has transformed the company in the last decade with five acquisitions totalling some €1.1bn:

2012: VNU Media Netherlands. €40m. Job sites Nationale Vacturebank and Intermediair, and tech e-commerce site Tweakers.

2014: Mecom. €235m. The remaining Netherlands and Denmark operations of David Montgomery’s ill-fated European news group, comprising a daily readership of 2.5m in the Netherlands and 500k in Denmark. Also radio stations with an aggregate audience of 1m.

2017: Medialaan. €217m. Belgium’s largest TV and radio broadcaster.

2018: Independer. €150m. Netherlands’ largest price comparison site for insurance products which has now expanded into banking, mortgages, and energy. The site has 5.7m monthly uniques, employs 300 people, and is now being launched in Belgium.

2019: Sanoma Netherlands. €460m. Dutch and Belgian magazines including Libelle, Donald Duck, Vtwonen and Veronica, as well as digital news platform NU. nl.

The one that got away was this year’s failed €700m bid for RTL’s Netherlands broadcasting. The DPG consolation was RTL’s Belgium operations, in a €250m JV with Groupe Rossel.

DPG has successfully leveraged its Flemish birthright to become the largest media group in the Netherlands (which accounts for some 60% of its revenue, profit and people). The company’s strength is its broad multimedia portfolio, as follows:

Digital uniques/wkReadersViewersListeners
Belgium3.9m5m2.4m1.2m
Netherlands9.1m7.2m1.2m
Denmark2.1m0.9m
Source: DPG Media

Its M&A is reflected in four years during which revenue has increased by 19% and EBITDA has doubled. DPG now employs almost 6,000 people and has continued to grow during the pandemic, with EBITDA margins this year expected to reach 21%:

2021**202020192018
Revenue1.9m1.8m1.6m1.6m
EBITDA0.4m0.3m0.2m0.2m
Margin21%17%13%13%
Net debt0.3m0.6m0.4m0.4m
* *Flashes & Flames estimate

The 2020 increase had been achieved through a strong performance in the Netherlands where DPG increased subscribers by 2% to 3.6m, more than compensating for a 13% fall in advertising. Overall, the company increased its digital reach (+10%), digital subscriptions (+38%), digital advertising (+4%) and online services (+10%). During the past two years, VTM in Belgium has been transformed from a traditional TV station into a broad-based video group including successful streaming services.

There it is. DPG Media is a little-known media company operating in three of Europe’s smaller countries. But it has a lot more revenue than either Bauer or Future Plc, and is not far behind the UK’s Daily Mail group. By any measure, it is one of Europe’s most successful media groups.

Its small origins have enabled DPG to grow a portfolio more diverse than almost any other, with substantial revenue across news media (50%), broadcast and streaming (25%), magazines (12%), and digital services including comparison sites, e-commerce, and classifieds (10%). Some two-thirds of revenue comes from readers – almost wholly by subscription.

The diversity is emphasised by DPG’s most profitable brands:

Media

  1. Algemeen Dagblad news media (NL)
  2. Volkskrant news media (NL)
  3. HLN news media (Belgium)
  4. VTM TV- streaming (Belgium)
  5. Libelle women’s magazine (NL)

Online

  1. Independer price comparison (NL)
  2. Tweakers tech e-commerce (NL, Belgium)
  3. Autotrack/ Gaspedaal car classifieds (NL)
  4. My Energy price comparison (Belgium)
  5. NVB jobs classifieds (NL)

After the rapid expansion of the last decade, Van Thillo is ambitious to grow the company further and faster, perhaps especially in “new” countries.

He is insistent that any acquisition needs to be of sufficient scale to enable DPG’s trademark multimedia development. He is not interested in chasing prospects; his approach to M&A might best be described as “studious opportunism” in which he waits for potential targets to become available before developing his plans (he says).

The potential scale of future acquisitions may be judged by the fact that DPG’s net debt this year is expected to be less than 1x EBITDA after several years of 2x EBITDA. This is one company that believes in borrowing to buy – but also in quickly paying down debt. In the absence of a big deal in the meantime, that may mean net debt will be virtually eliminated in 2022. With EBITDA of some €450m next year, DPG might expect to spend 2x EBITDA (or almost €1bn) on acquisitions in the next few years.

The Belgium-based company may continue to avoid Europe’s largest media economies (although the UK’s Reach Plc is the type of news-sports-entertainment challenge you would expect to appetise Van Thillo). Perhaps his next frontier will be either Spain, Portugal, Sweden or Norway. A secret company no more.

DPG Media