Isentia axes King Content, closes its NY and HK offices and writes down $37.8m
Less than two years after buying content marketing agency King Content, Isentia has axed the brand, writing off $37.8m of its investment.
In an update to the ASX today, Isentia told the market that the board had decided to kill the King Content brand and close its offices in Hong Kong and New York. King Content’s work will instead be folded into Isentia’s main operation.
The ASX statement also signalled job losses at King Content:
“The King Content brand is being discontinued and its operations fully integrated into Isentia under the Isentia brand. We have closed the King Content New York and Hong Kong offices and will continue to service our US clients out of the UK and our Hong Kong clients out of Singapore. We have further cut the ongoing headcount in the content marketing business.”
The market update revealed that Isentia – formerly known as Media Monitors – will report lower revenues and profits than previously expected.
It said that revenues would be $155.1m for the year. In the last financial year they also came in at $155m.
Profits will be down on last year, with Isentia signalling underlying profits of $41.5m, compared to $51m last year.
However, because of the writedown of the King Content investment, the reported profit number will be far lower.
The update revealed that King Content was loss-making, losing Isentia $4.4m in the last financial year compared to a profit of $3.6m the year before.
In more bad news for the market, Isentia said it had needed to allow $0.5m for “bad debt clean-up in Asia”. It also said that the decision to put up its prices for its main business of media monitoring had led to reduced revenues in Australia and New Zealand during the last three months of the financial year, which ended on June 30.
ISentia also told the market that the deployment of its Mediaportal service in Korea had been delayed.
Hodges: Sold King Content in 2015
When King Content was sold by founder Craig Hodges in 2015, the headline price for the deal was $48m, although some of this was due to come later, based on the agency’s future performance. The $37.8m figure is likely to reflect the total Isentia actually ended up paying for King Content.
Hodges left the company earlier this year. He was replaced as CEO by former Bauer Media boss Matt Stanton.
In today’s ASX update, Croll said the announcement was “disappointing”.
Croll: Disappointing
He said: “While it is disappointing to have to provide this lower earnings update for FY17, looking forward, we have put in place a number of initiatives to improve operating performance across the business. The challenging competitive environment we faced in FY17 H1 has improved with Isentia winning back 50 clients net from our competitors in Australia in FY17 H2”.
Last month, Isentia went to court with competitor Meltwater in a battle over its content.
Prior to the ASX opening today, Isentia’s share price stood at $2.22, valuing the company at $444m. In the first few minutes of trading, the share price plummeted by nearly 20%, wiping more than $80m off the company’s market capitalisation.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Said it before, say it again. Craig is a genius.
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For a $155m turnover company that is one giant fuck up
One which Hodges and Ford are almost in the clear on perhaps
Or not?
Yes Hodges and Ford are in the clear.. they got their money and also came to an agreement with the company on an exit which happened months ago.
This is just a pure giant fuck up by the company.
Shareholders suffer because of the folly of the management. Don’t know how much of investors wealth has been obliterated but their share price at one stage was nearly $5. Its now under $2. Pity those people who bought in on the back of promises and glossy presentations about the rosy future with King Content driving growth.
At what stage does the CEO take responsibility and step down to make way for someone else to try?
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Oh noes. Bad management or a troubling sign for content marketing as a whole?
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What a score!
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No surprise. Read about it in Feb https://campaigncapitalblog.wordpress.com/2017/02/23/isentia-back-in-the-news/
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I don’t understand why these branded content media companies keep going belly-up?
Note: if you are hearing sarcasm in my tone, then you are hearing correctly.
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Incredible sales story, this one – first, the KC new-business machine, appearing overnight as Thought Leaders and snapping up clients at will; second, the sale to Isentia.
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Grossly overpaid management team and underpaid workers which inevitably led to unhappy workers. Those same unhappy workers are the ones that maintain the client relationships and drive the revenues of the company. Look after your people, recognise and reward those that keep the revenue stream alive and business will succeed. Treat them poorly and this is often the result……….
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you can see these a mile off – there’s another one brewing now. companies designed solely for quick exits.
company jumps on hot new thing. overnight claims to be ‘the expert’ … gets quick client wins and some revenue and dumb acquirer pays over the odds based on future potential which never happens.
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I’m speechless!
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thanks for sharing, very prescient analysis!
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No need for the CEO to step down when the Financial Director has already been jettisoned on his behalf.
Look for management to put the squeeze on frontline staff to sell sell sell to their clients to plug the financial hole they have in the boat.
Staff morale over there must still be in the red.
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When content becomes a more important ‘piece’ than context even a King gets checkmated!
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Doesn’t matter if it’s content or old fashioned above-the-line advertising. Any agency that grows too fast and makes its growth (rather than quality of the work) the focus will eventually founder.
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As a former KC employee, this still made me sad. Yes there were huge management issues and chaos was the real king, but I still had some good times there and met some great people who worked their asses off for little to no reward.
If the staff, NOT management, had been empowered to work with the clients on original ideas and put a few organisational strategies in place, this could have led to a better outcome. The issue (in my opinion) is the staff were on the frontlines, dealing directly with clients day after day, but were often left in the dark about the bigger picture. If the management had been a little more flat, a little less secretive, maybe the staff could have been able to put out more fires. Instead it felt like we were always flying blind and just had our fingers crossed.
Still, a shame. Thanks for the memories KC!
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My dad was really unimpressed with this news…
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Morale is non existent among former King staff.
Source; former employee.
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Croll over, Beethoven.
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*Edit: Morale is non-existent among King staff.
Source; former employee.
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Content is going nowhere, the few agencies in the market that do it right are killing it, and big blue chip clients are lining up.
King Content was designed to grow fast and sell big, but the quality of the product was poor at best. Buy any company in any sector without doing your due diligence and you’ll lose money.
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May be I am reading too much, but it looks like there are more skeletons in the closet. Wait for few weeks when they will announce the final results for FY17. I strongly suspect their core business (Media Intelligence in Australia and New Zealand) is rotten, they have lost a large number of big revenue clients. Ohh, and winning back 50 small clients net from competitors in FY17 H2 just peanuts. Basically, they have gone backward – a 3% decline YoY.
Now, management is hiding behind the King content to cover up their incompetencies and poor business management. There was so much hoopla in the trading update about key initiatives but with no revenue attached to them. I find it really dumb when they talk about aggressively protecting copyright, they are inviting the wolf (read copyright agencies) for a large feast.
I bet neither CEO nor anyone in the board will resign. CEO selected the board, the board will oblige him by not sacrificing him. They will find few scapegoats in lower ranks and the chapter will be closed for one more Financial year. At the end, shareholders are the biggest losers.
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This comment must be some staffs from isentia…
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Whose your dad?
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I’m his father.
Im very disappointed he worked for King Content.
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Sometimes I wonder if I shall ever look up and see the light of day again from within this wretched Dad Hole.
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No shit Sherlock…
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