The worst performing media companies in Europe - by revenue growth

The worst performing media companies in Europe - by revenue growth

It’s no secret that most media companies are struggling to adapt to the new digital world.  The toxic mix of legacy print / broadcast media assets, high overheads and organisational aversion to change means that many media companies are seeing quarter-on-quarter / year-on-year losses starting to mount.  In some cases, thanks to historic profitability and prudence, these losses aren’t immediately terminal, however there’s no doubt that investors are starting to question whether these companies can turn themselves around.

So, who’s in the worst shape across Europe?  Well, taking the 25 biggest media companies in Europe and trawling through their financials reveals a motley crew of media companies in year-on-year revenue decline.

Worst performing media companies in Europe (by revenue growth)

  • Sanoma Media (Finland): -11% revenue growth, €1.7 billion revenues and €265 million EBITDA
  • Hubert Burda Media (Germany): -10% revenue growth, €2.8 billion revenues, profit not stated
  • Grupo Prisa (Spain): -6% revenue growth, €1.37 billion revenues, €16 million EBITDA
  • Tamedia (Switzerland): -5% revenue growth, €1 billion revenues, €243 million EBITDA
  • Mondadori (Italy): -4% revenue growth, €1.1 billion revenues, €81 million EBITDA
  • RCS Media Group (Italy): -3% revenue growth, €1 billion revenues, €72 million EBITDA
  • Daily Mail and General Trust (UK): -2% revenue growth, €2.15 billion revenues, €330 million EBITDA

Digging deeper into the financial reports of these companies you see a reoccurring theme.  The ones with the biggest decline in growth are those with the largest exposure to print advertising, and the ones that haven’t been diversifying quickly enough - both from a product and geography perspective.

Take Tamedia from example, in Switzerland.  Looking at their financial reports Tamedia saw a -5% decrease in revenues in 2015, driven largely by its 9% decrease in print advertising revenues.  Against this print decline, they saw digital year-on-year growth of 19% - with digital display growing 23% - and digital now accounting for 28% of its revenue, and an impressive 39% of its EBITDA. 

Overall, Tamedia booked an impressive EBITDA margin of 22.9% (which increased from the previous year’s 21.6%), giving an indication that their Executive team is managing the print revenue decline well (largely by cutting costs in the right places) and replacing costly print revenue with higher-margin digital sales.

In contrast to Tamedia, Grupo Prisa, the Spanish newspaper publisher, looks in worse shape, seeing not only a -6% decline in revenue but also a EBITDA margin of 1.1%, booking only 16 million profit on over 1 billion in revenues.  Grupo Prisa’s situation is seemingly down to a toxic mix of negative product and geographic exposure.  From a product perspective, not only is Grupo Prisa facing print declines, but its also facing challenges from its historically profitable education division - another industry challenged by digital.  From a geographic perspective, Grupo Prisa’s core markets of Spain and South America haven’t been in the best financial shape in the last few years - unlike Tamedia’s exposure to the Swiss market, where not only the economy is strong, but advertising market prices are also strong with average digital  CPMs hovering around the €50 to €80 mark.

Overall, the general message for media companies is that although they can manage profitability via cost cutting, they need to address their fundamental revenue growth through diversification and investment in digital, otherwise they will start burning money at a serious rate - as the UK's Guardian has found out.

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