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Aug 14, 2017

Isentia braces for poorer-than-expected results in wake of King Content fiasco

Isentia probably should not have bought King Content in retrospect -- though the company swears it was a good idea at the time.

Isentia has restructured its businesses ahead of announcing its financial results next week.

After announcing last week it would write down the value of its expensive King Content acquisition and roll it into the Isentia brand, the media intelligence company is now operating all its branches under the same name. In the same market announcement, Isentia said its revenue and earnings before interest tax depreciation and amortisation would both be less than previous guidance had indicated.

King Content was a disastrous acquisition for Isentia — it bought the business in 2015 to great fanfare, but it was reporting increasing losses until its value was written down to zero earlier this month. Its offices in Hong Kong and New York were shut, jobs were cut and assets rolled into Isentia.

Isentia CEO John Croll blamed King Content’s previous focus on short term contracts and market changes for the dramatic losses. He said that since the acquisition, a lot of brands had started their own content divisions, employing journalists to produce their own content.

Croll said due diligence had been done on King Content before Isentia bought it in 2015, and it had been profitable at first, but changes in the industry had knocked it around — major clients were setting up their own content divisions and there wasn’t any integration between Isentia’s insights and data businesses.

“People were going through a transition, like ANZ did, where they started employing their own journalists, and they didn’t need us to build the content for them going forward. So  there had been a lot of revenue in those clients that moved away quite quickly,” he said. And that was the issue for us that became very short term revenue and campaign based instead of the strategy in building out the platform.”

Croll said Isentia was now looking for longer-term contracts and strategies to use the insights side of the business with the content side.

“The revenue growth might not be so spectacular, but the actual dependency on that revenue will be much more certain,” he said.

Croll said King Content had been moving into video content, which was a congested market. “We’ve pulled it back to where we’re strong,” he said. “We want to be a data intelligence company.”

It’s been a tough year for Isentia, which is still caught up in a legal battle with competitor Meltwater, which Isentia has accused of breaching its copyright and inducing Isentia clients to breach their contracts to give Meltwater access to Isentia accounts.

The matter is still before the courts — Isentia lost an application to get Meltwater to hand over an affidavit detailing all its Isentia accounts. Meltwater’s defence will need to be handed to the Federal Court by September 1.

Croll said the events leading to the court action was a “copyright mismatch” and a “difficulty”, but there was now a level playing field between competitors in copyright agreements in the market.

The restructure shows a swivel back to Isentia’s original and core business — content. Croll said Isentia’s biggest asset was its access to content and data, and using those insights to work on content strategy with clients.

As part of the restructure, Isentia has also added a “stories” function to its media monitoring portal, which will pull together clusters of content from traditional media and social media, according to news trends, updated throughout the day.

Isentia will announce its end-of-year results next week.

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