- Thème:Commercial due diligence (CDD)
- Secteur:Media and publishing
Issue
AMR’s client was a US private equity fund which was evaluating a buy-out of a profitable magazine publishing company. Three quarters of sales were display and online revenues were negligible.
Approach
Taking a magnifying glass to each of the magazine titles in the group, we divided our analysis between a range of factors including the health of the advertiser and reader markets, the level of innovation in those markets and the strength of the titles relative to the online and offline competition. By interviewing a number of marketing managers in each advertiser market we were able to assess the potential for additional revenue streams such as events and custom publishing, as well understanding how quickly marketing spend was migrating online.
Recommendations
AMR found that while sales at the target’s main title had been growing strongly, it was exposed to competition from well established online-only portals and advertising budgets in this segment were rapidly moving online. Moreover the target had no track record of managing the shift of revenues from print to online anywhere in its business.
Result
AMR’s client could not justify the level of risk and potential additional investment which would be required to reposition the business, and therefore withdrew from the auction process.
Insight from AMR’s work
The structural shift in advertising spend towards online require a wholesale change in the culture of the print businesses. This cannot be achieved in a short space of time, and can only happen if there is buy-in at all levels of the business, from senior management to the ad sales teams.