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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.

Isentia’s financial director Nimesh Shah, who led the acquisition of King Content along with CEO John Croll, resigned earlier this year.

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.

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