The curious cases of publisher valuations

October 17, 2024

Have you noticed that a lot of newspaper and magazine business have been changing hands recently?

I know we are all waiting for the budget and what it will mean for our clients and ourselves.  There is not much to say really because everything is still speculation, but it is clear that if the costs of running a business increase due to higher taxes on businesses, that will depress profitability and therefore is likely to reduce valuations.   The issue of equalising or near equalising different taxes could also have some interesting impacts for the types of work you will be asked to do; perhaps some of that work will need our help.  Let’s wait and see.

After the budget, we will write to you with our thoughts on what the impacts are going to be on the valuation of businesses, shares and other assets.

This week, the news that The Telegraph may finally have found a buyer prompted me to think a bit about the value of our great news organs.  We’ve also seen this week in a situation that moves from the sublime to the ridiculous. The London Evening Standard is only still trading thanks to the support of its shareholders but The Spectator (a trophy asset if there ever was one) was sold for £100m – a price that everyone thinks was staggering.

The Observer is for sale too https://amp.theguardian.com/media/2024/sep/17/guardian-parent-company-in-talks-over-potential-sale-of-observer “

It is reported that the Murdoch family are resolving issues around control etc of that publishing empire.

The FT hit profits of £29.9m in 2023 on revenue just over the magic £500m, but in its home market pre-tax profits dropped to £3.9m from £6.8m the year before.

How would we approach the exercise if we were to be offered the privilege of valuing all the UK news publishers, given the discordant messages on performance from so many different players in such a short space of time?

The truth is it would be complex. We would have to consider many different factors:

• Is print in terminal decline or will there end up being a long tail which has value?
• In the digital environment what are the companies doing to monetise? Subscriptions by DD – yes please! But what about the rest.
• Where and what is the live offer (look at how women’s magazines are now adding value to subscriptions with live events as well as special offers) – what does monetisation look like?
• How can the brand be extended?  I am a great fan of FT Live events for example.  And is the brand value on the balance sheet?
• What is happening in other forms of media and events which may be providing clues as to the future?
• What on earth does the arrival of Chat GPT mean – is the company suing or engaging?
• We would be paying special attention to the financing structure of each business – if there is one, is the debt stack wiping out any equity value for now or in the long term?
• There will be more….

I would be very loathe to value any of these brands without top quality BOARD APPROVED financial projections for at least the next five years.  Using those we could do several DCF valuations and calibrate the answers to draw a conclusion.  The past is irrelevant in such a fast-paced industry, but the brand value that has been built up is a very different story; that will need valuing.  The value of the journalists will also be something to consider, particularly those with their own following and who sell papers or eyeballs in their own right.

We would want to deep dive into quoted market comparables as well as M&A.  We may well pull in a futurologist type individual who can unpick what might be happening next in terms of macro and industry factors.

Back in 2023 this is what the FT thought How much is The Telegraph worth? (ft.com) (spoiler alert £500m!).

Redbird EMI is often reported to have paid £600m for it.

The Press Gazette reported last month (telegraph-sale-latest-bidders-investors-spectator) that Lord Saatchi’s offer for £350m + earnouts was rejected. The FT has reported that Dovid Efune may end up being the successful bidder at £550m Dovid Efune closes in on £550mn deal for UK’s Telegraph (ft.com).

But no-one is sure as all parties are not responding to press enquires.

It’s going to be a close run thing whether we hear about the Telegraph sale or the budget first….

Meanwhile, here at Athla Valuations we keep our eyes down working hard on lots of different types of valuation.  But we always have time for you and your clients.  No question or requirement is too big or too small. Call or email any of us anytime.