Vinyl Group falls after revealing Val Morgan Digital deal
The Unmade Index kicked off March by dropping to yet another all time low, as most of Australia’s listed media and marketing stocks took a beating.
Most notably, Vinyl Group lost 4.5% after the Richard White-dominated publishing and platforms rollup announced it had agreed to buy Val Morgan’s digital publishing arm for $7m in cash plus $3.5m in shares.
Most of the Val Morgan Digital assets are licences to monetise overseas brands such as Buzzfeed, Ladbible, Popsugar and Vox Media. The model matches that already adopted by Vinyl which has the rights to publish Rolling Stone and Variety locally.
According to the announcement, VMD wrote revenue of $10.7m in the previous financial year, and the deal will grow Vinyl’s profits by $2.5m once the purchase has been bedded in.
Vinyl also said it will be able to access a $10m loan facility from its shareholders. Along with funding the $7m needed for the purchase, the facility will bail out the loss-making company. Last week, Vinyl revealed that in the first half of this financial year it had made a $3.1m loss after tax.
However, Vinyl Group was by no means the only stock to take a battering on Monday. The biggest locally headquartered stock Nine lost 1.9%, taking it to a $1.6bn market capitalisation.
Sports Entertainment Group, owner of SEN Radio, lost 9.1%. And Global Traffic Network, which has similar shareholders to SEG, lost 6%.
The only stocks to improve were Southern Cross Austereo, up by 2.5% and I’ve Group, up 0.7%.
The Unmade Index fell 1.17%, landing on 404.7 points – the lowest the index has ever been. By contrast, the wider ASX All Ordinaries was flat for the day, despite Middle East tremors.
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