Just eight months after dotcom daftness reached its peak, Emap has read the e-writing on the cyber-wall and drastically cut back its investment in new media projects.
Last March the London-headquartered international media group, then at the forefront of e-mania, announced a three-year internet investment programme worth between £200 million to £250m ($355m). But yesterday its bullishness subsided with the revelation of stagnant half-year profits.
In the six months to September 30, profit before exceptionals slid to £92m on sales of £567m (£549m). But after allowing for digital investment and other exceptional items, the pre-tax figure sagged to £21m from £101m in 1999.
The adverse results triggered an investment cutback, slashing the previous figure of up to £250m over three years by more than half to £120m. Chief executive Kevin Hand attributed the decision to investor sentiment: “It is a different environment now," he said. "There is much more realism in the digital world, which is a good thing."
Emap will now focus on eight key digital projects in core areas such as music and automotive, between them accounting for around £80m of the total investment. A further £20m is set aside for other digital developments, mostly in content, plus a further £20m allocated to a seed capital fund.
Emap’s traditional media did reasonably well – especially its radio and French subsidiaries. But underlying consumer advertising revenues fell 3% due to a restructuring of the group’s sales division. Stateside, profits and sales both declined due to a fall in automotive ad revenues and start-up costs for lads-mag FHM.
News source: Financial Times