In a deal which underlines both the increasing value of specialist-enthusiast content and the fusion of online and broadcast media, the $13bn Discovery Inc – which acquired a 20.1% share of the Play Sports Group (PSG) for an estimated £7m in 2017 – has now taken control of the cycling digital. It is paying £32.1m to increase its stake to 70.7%, valuing PSN at some £65m (4 x revenue).
The remaining 29.3% is still owned by founder Simon Wear under the terms of an earnout expected to conclude in 2021. Meanwhile, Wear (who had previously owned 76% of the company) remains CEO of what is now a subsidiary of Discovery. It looks a great fit.
The UK-based company produces over 1,000 online videos annually on YouTube. It gets 45m monthly video views, 3.1m subscribers and 5.7m social followers for eight online channels including Global Cycling Network (claimed to be the world’s largest and fastest growing cycling channel), Global Mountain Bike Network, and the Global Triathlon Network.
PSG says its “videos bring fans compelling daily content including expert tutorials, techniques, training, unparalleled behind the scenes event coverage, humour and entertainment. Presented by ex pro riders, GCN offers a uniquely qualified insight into the world of cycling, fuelling its viewers’ passion and knowledge”. YouTube’s European boss describes it as “a shining example of how to grow a passionate audience of fans using YouTube’s platform.”
The fast-growing company employs some 140 people, including specialist marketing agency Shift Active Media, whose clients include many of the largest cycling brands. PSG has revenues of £15m and is thought to have been profitable in 2018 after making an EBITDA loss of £71k for the previous year. Revenues have multiplied three times in the past two years and are 80% from outside the UK.
In 2018, PSG launched five new international channels, a consumer retail division and fan club, and broadcast live racing on its YouTube channels and via Facebook Watch.
Discovery’s Eurosport claims to be Europe’s leading sport ‘destination’ and the primary TV rights holder for key cycling events, establishing an unrivalled portfolio which includes all three Grand Tours, more than 35 UCI World Tour races, including all five of the iconic Monuments, and the UCI World Championships. In 2019, cycling fans will be able to see over 200 days and 2,500 hours of live cycling on Eurosport. Its online site has an average of 42m monthly uniques. Discovery claims now to be the leader of an estimated $50bn global cycling media market.
Life-long cycling enthusiast Wear launched PSG in 2012, two years after he had ended an 18-year career at magazines group Future Plc to start the Shift Active Media agency. He was Chief Operating Officer of Future UK having also led the company’s dramatic growth in international licensing revenues. He secured highly-profitable deals with 56 partners in 39 countries to produce a peak global print audience of 25m for niche magazines as diverse as T3, Guitarist, PC Gamer, and Cycling Plus.
Wear’s passion for specialist media seemed a perfect match for the magazine company founded 34 years ago by TED’s Chris Anderson in the picture-book city of Bath in England’s South West. Anderson, whose revered TedTalks became “Ideas Worth Spreading” in his next life, originally sloganised his hometown magazine business as “Media With Passion”.
Future IPOd in the tech-investor boom of 1999 and quickly raced to a market cap of £1bn, followed abruptly by the first of a series of near-death sell-offs by fickle investors. There was often a lot more passion than profit.
Future’s collective enthusiasm somehow carried it through successive crises in the two decades before it finally escaped from a UK-typical dependency on newsstand sales and print advertising. But the home-spun, try-anything publisher was a brilliant business school for Simon Wear, whose entrepreneurial instincts were ultimately spiked by 21st century magazine cutbacks by UK supermarkets and advertisers. By then, he had fallen in love with online video and “the limitless distribution and total meritocracy (the best content wins) of YouTube. I just had to work out how to do it.”
Back in 2012, some observers assumed that Wear’s Bath-based launch of the Global Cycling Network (GCN) was actually coming down the road from Future whose cycling-magazine web sites (since divested to raise rehab cash) were then attracting over 5m monthly uniques. In 2012, Flashes & Flames said that GCN was an indication of how much “magazine publishers like Future will have to change in order to compete. Suddenly, the world’s leading cycling publisher finds itself on the outside lane in a key growth sector.”
Six years later, the Play Sports Group is powerful fan and community -based media. The realisation that the future of so much media lies in “narrow-but-deep” content and relationships is nothing new. Indeed, for all the damaging loss of print advertising, the relatively steady audiences enjoyed by many specialist magazine brands underline the global promise of media produced by enthusiasts for enthusiasts. But they will have to work at it.
Meanwhile, the mighty Discovery seeks to become “the premier real life entertainment company” with multi-platform assets around distinct programming niches, from cooking, home decorating and motoring to golf, cycling and other sports. The PSG acquisition follows announcement of Discovery’s Golf TV streaming service which launches this year with the PGA Tour and Tiger Woods.
The strategy emphasises the unmistakeable threat of TV-led “media fusion” for magazine-centric companies: broadcast-streaming, text and interactive digital combining to offer the ultimate in consumer engagement and e-commerce. But specialist consumer publishers (and perhaps some B2B groups too) can also build global multi-platform communities of fans and enthusiasts beyond the reach of the data monsters.
Former Top Gear TV presenter Jeremy Clarkson’s DriveTribe online communities enjoyed a luxuriously over-funded launch (£12m burned in two years), and may now be close to securing the additional investment necessary to monetise a fast-growing global audience. But, with a small fraction of the investment and none of the fanfare, the energetic Simon Wear has shown publishers everywhere how to do it.
