Digital Music Downloads

DMGT is requesting regulatory clearance of its merger with TMG from the Secretary of State for DCMS, which could be granted by March. TMG, a quality brand mainly sold on subscription, will join DMG Media. TMG already outsources print ad sales to Mail Metro Media and printing to Newsprinters (News UK/DMGT).

DMGT’s offer of £500 million for TMG is good news for the UK news industry. DMGT’s valuation of TMG at 8x EBITDA is well above the valuations produced by private equity (PE) funders. PE is a short-term form of financial engineering ill-suited to TMG in the middle of its print-to-digital transition and transformation.

TMG will gain an owner in DMGT that espouses a long-term vision of investment in consumer media. Each news brand produces its own content to serve and retain their audiences. Lord Rothermere practices the principle of editorial independence of each brand to protect each one’s identity.

The expected service revenue boost from in-contract price increases failed to materialize this quarter, nullifying the upside surprise last quarter.

Traffic growth picked up again to 17%, lending further weight to the view that at least some of the recent sharp slowdown was somewhat one-off in nature.

Government statistics imply steep mobile price inflation while the opposite is true—which may help to diffuse the current furore over in-contract price increases.

The UK broadcasting sector is undecided on how much to engage with a technology that could simultaneously threaten industry jobs, intellectual property, and competitive advantages. Some do not see themselves as in a position to take risks with AI, but the sector must consider the longer-term risks to inaction.

There is clear value to be unlocked along the production pipeline with AI, and unrealised opportunities for content owners to apply AI to their libraries and enhance discovery.

None in the industry can ignore how AI changes the wider competitive landscape: new AI services will provide audiences with alternative products, and disrupt distribution.