- Service:Commercial due diligence (CDD)
- Sector:Media and publishing
Client: leading B2B and B2C publisher operating in US and UK
Issue
AMR’s client was a leading UK media company with a subsidiary focusing on US Congressional news and information. The opportunity had arisen for the subsidiary to acquire one of its leading competitors and the client required comfort around the stability and growth opportunity offered by the target’s core online subscription business.
Approach
Our work began with a number of detailed discussions with management from both our client and the target. Using our baseline understanding of the business, the team then conducted more than 100 interviews with customers across the target’s various products. A critical part of our methodology was sizing the addressable market for each major product. To do this, we segmented the customer base into core and non-core and used the output from our interviews to quantify the current and potential level of penetration in each.
Recommendations
Our work concluded that new product introductions could drive average revenue per customer growth amongst core customers and penetration amongst non-core customers. AMR also identified that subscription renewals and advertising sales were unlikely to be negatively impacted by combining the two competitors. In fact, purchasing a bundle of advertising from the combined entity could be attractive to some customers.
Result
Following the completion of due diligence, our client acquired the target company through its subsidiary.
Insight from AMR’s research
Despite the relatively mature state of the target’s business, AMR discovered that growth with both new and existing customers was possible through the introduction of new products. In addition, the research indicated that the merger of two of the leading players in the industry was unlikely to damage subscriber and advertiser relationships.