Sunday 17 December 2017

Analysis: INM still targeting digital acquisitions in evolution

INM chief executive officer Robert Pitt. Photo: Tom Burke
INM chief executive officer Robert Pitt. Photo: Tom Burke
John Mulligan

John Mulligan

INM's results tell a story that's being repeated in print media across the developed world - print circulations, and the associated advertising revenues, are falling as digital becomes the primary source of news for consumers.

Broadly, that leaves behind two types of what were once traditional news publishers: those with the financial resources to become acquirers and develop their digital offering, and those without war chests to enable them to battle declining print sales.

With a cash balance of €84.8m, INM has the wherewithal to make at least some bolt-on acquisitions that would deepen its digital presence.

But INM ceo Robert Pitt said that the group was unlikely to resort to borrowing to fund acquisitions - at least for now. That leaves it relying on that cash pile and free cash flow to do so, leaving it confined, probably, to smaller deals than leverage might allow.

"To borrow to buy, we'd have to have a very high degree of confidence that the cash would be returned extremely quickly," Mr Pitt told analysts. "That's going to make the targets even more difficult to identify, because obviously targets like that would be extremely popular and have a very high price tag."

Mr Pitt noted that INM made a pre-tax profit of €41.8m last year, an 11.8pc jump, as revenue edged 0.7pc higher to €323.4m. The group publishes titles including the 'Irish Independent' and the 'Sunday Independent'. The group revenue growth was boosted by increased digital revenue, which was 20.4pc higher, offsetting a decline in publishing advertising.

Mr Pitt ruled out making print acquisitions in Britain because INM wouldn't benefit from the kind of synergies it can avail of in Ireland, where it has its own printing press and a distribution network. Business-to-business media is of interest to the group, said Mr Pitt, who said he would canvass analyst and investor views on that - but digital is definitely the prime target for INM.

Mr Pitt said that some potential acquisitions had been close to being sealed but had not ultimately happened, and added that he hoped shareholders would continue to have patience.

"We do need to acquire," he said. "We need to grow this business again."    

Irish Independent

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