ASX-listed media intelligence provider Isentia has announced it will axe the King Content brand after acquiring it nearly two years ago for $48 million.
In a market update this morning, Isentia revealed that the board has decided to fully write down the value of the content marketing arm due to its poor financial performance during the last financial year.
King Content is expected to report $14.2 million in revenue for FY17 (down 30 per cent year on year) and an EBITDA loss of $4.4 million (compared with an EBITDA profit of $3.6 million in FY16).
Isentia said it expects the writedown of King Content to result in an impairment charge of $37.8 million in FY17.
“The King Content brand is being discontinued and its operations fully integrated into Isentia under the Isentia brand,” the update said.
“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 also revealed that Isentia will report lower revenues and profits than it anticipated previously for FY17 in May.
The company has downgraded its revenue forecast from $162 million to 155.1 million, while underlying profits are expected to total $41.5m instead of $44 million.
Isentia noted that the revised expectations are partly due to a $500,000 impact from a “bad debt clean-up in Asia”.
John Croll, CEO of Isentia, described the market update as “disappointing”, but assured shareholders that the company has 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,” he said.
“Our focus now is on leveraging our core business where we have a significant market share, and enhancing and broadening our products as we deliver the most comprehensive media intelligence and insights to our customers in FY18.”