Telegraph Media Group: DMGT takes on the merger

DMGT proposes to acquire Telegraph Media Group (TMG) after RedBird Capital pulled its bid. 

TMG has a pristine balance sheet and is ready to be sold by RedBird IMI for the reserve price of £500 million to DMGT.

Lacklustre results for the topline in 2024 are partly due to the lengthy period of limbo since May 2023, but EBITDA is steady at £61 million.

Big tech, even the US economy at large, is betting the house on AI. Some air might come out of the bubble, but AI investments’ trajectory will stay the course over the next 24 months.

UK national media and content creators face an acute challenge as they exploit global platforms’ ‘export’ opportunities, with AI’s ‘glocalisation’ potential a key new trend for future online video.

AI platforms could create an even tougher online media environment over the next few years. OpenAI’s spending plans are predicated on resetting how people shop, search and access entertainment.

Altnet losses expanded to £1.5bn in 2024, as EBITDA losses persisted and interest costs rose sharply, with ARPUs weakening and operating costs stubbornly high, and the increasing interest burden looking unpayable under any reasonable scenario.

Even the best performing altnets can barely make EBITDA breakeven, and not make sufficient margins to cover ongoing customer acquisition investment, resulting in a perpetual cash drain for their investors.

The impact on the rest of the sector is worsening in the short term as pricing falls, but this should accelerate the inevitable consolidation into a sustainable wholesale model under CityFibre and/or VMO2/nexfibre.