Ascential Plc is the £1.8bn, UK-based information and events company whose CEO Duncan Painter has never been afraid to take strategic decisions that might prove dilutive or difficult to understand in the short-term. That’s how he has built an international digital business out of the (largely) B2B magazines and exhibitions he inherited from the former EMAP Plc.
The truth is a bit more complex because the legacy assets also included Ascential’s brilliant global fashion forecaster WGSN and the Cannes Lions event, which was also doing great until the pandemic intervened. But Painter certainly won investor plaudits for coolly taking tough decisions to divest profitable publishing and trade shows in order to reinvest the proceeds (especially in e-commerce analytics) – and swing his business away from traditional media. Now, he’s had the chance to be equally unsentimental about a company he himself had acquired almost five years ago.
Ascential this week sold MediaLink, its advisory business, for $125m in cash, maybe not much more than the total it paid in March 2017, acquisition-linked employment costs, and the earnout that expired this year. The listed company demonstrated its sensitivity about selling what had always looked like a left-field purchase. It pre-emptively declared that MediaLink had generated “an internal rate of return of 14% per annum for the almost five years it has been owned by Ascential, taking into account its purchase cost, its annual profits and cash flows and the sale price announced today”.
In uncharacteristically positive vendor comment, it was also quick to praise MediaLink’s “strong growth in 2021” to $44.2m revenue and $10.1m EBITDA. But it avoided referring to the fact that, in 2016 – the year before Ascential’s acquisition – MediaLink had claimed revenue of $54m (29% up on 2015) and profit of $14m, before slumping under its new owner. The post-acquisition pain inflicted by MediaLink could be gauged by Annual Report statements in successive years about the progress towards “aligning with our strategic goals”; and “delivering a more sustainable business”. The third year was silent.
Those never-to-be-repeated profits had been earned by Medialink at the Consumer Electronics Show (CES), Advertising Week, and Ascential’s own Cannes Lions which always made it seem like a curious acquisition target. Eighteen months before the 2017 deal, MediaLink owner Michael Kassan was interviewing Martin Sorrell on stage at Advertising Week in New York, during which he predicted that advertising agencies would become “more like advisers”. Gossip suggested Kassan was brazenly pitching his own firm to Sorrell’s WPP.
MediaLink had become known for its celebrity-filled parties, dinners and deal-making at international trade shows. Kassan’s see-and-be-seen functions had proved to be good business for event organisers – and for MediaLink’s image. But Sorrell chose to pass up the invitation to acquire it.
The 18-year-old company is the latest episode in the colourful career of Michael Kassan who started out as an entertainment industry tax lawyer. He was splashed by a 1996 suspension from the bar in California after financial irregularities which dogged him throughout the 1990s. In 1999, his abrupt departure from InterPublic prompted a former colleague to describe him in the UK’s Marketing Week magazine as “a flashy character who people could run out of patience with. He is the sort of person with 18 mobile phones and private jets everywhere. Somewhere, he has overstepped the mark. This is a hugely political situation, and it looks like Kassan is a casualty, either through his own dealings or not.”
But all that changed in 2003 with MediaLink whose deal-making was characterised by Kassan’s favourite lyrics from Hamilton, the hit Broadway musical:
No one really knows how the game is played
The art of the trade
How the sausage gets made
We just assume that it happens
But no one else is in
The room where it happens.
Kassan boasts about “being in the room where it happens”, wherever deals are made in media and advertising. But his company’s reputation was not always so shiny. Six years ago, Recode commented: “Though MediaLink’s services aren’t really much different from firms like McKinsey or Bain, they inspire a sort of brand loyalty among their clients, in part because they pair consulting with a new executive search business. If you’re an executive in their full service, MediaLink hires you, plans your parties, guides your strategy, introduces you to your friends, and then finds you your next job. MediaLink can also fire you. Among media executives, fear of MediaLink is real.”
The party-giving MediaLink always looked like an odd investment for Ascential. Just to make the point, it has now been acquired not by a publishing, events or consulting business, but by the United Talent Agency.
Ascential Plc can now concentrate on what it does best – trading data rather than air kisses.
For 2021, Ascential is expected to report bounce-back revenue of £361.6m (+37%) and £85.4m EBITDA. Digital commerce – perhaps almost 50% of revenue – is the new US-based core business, which may mean more portfolio “re-focusing” in the future. Next year, it may regain pre-pandemic profitability and growth, spurred by booming advertising, the recovery of events, and by bolt-on analytics acquisitions. Phew.
