Guardian Execs On ContentNext Acquisition: McCall, Brooks Talk Up Expansion

This story was written by Staci D. Kramer.
The acquisition of our parent company, ContentNext Media, is a major change for us, but it also marks a turning point for the UK company to which we now belong. ContentNext is Guardian News & Media's first acquisition outside the UK and its first of this sort at all; we are also now the company's largest U.S. presence. I spoke separately with Carolyn McCall, chief executive of Guardian Media Group, and Tim Brooks, a former journalist and managing director of Guardian News & Media, the part of the company where we fit in. No details on finances (we'll leave that to Kara) but this is clearly a significant investment of energy and resources for Guardian as well.

Why paidContent and ContentNext?: Brooks: "Absolutely essential to what we do is editorial independence and editorial integrity, and ContentNext absolutely lives by those same very high standards. Rafat always exemplified that way of operating and we wouldn't have looked twice at any business that didn't exemplify those standards of integrity and independence. ... It's a growing business. It's very well regarded by very senior people in the industry it serves, including, incidentally, all the senior people here, and it's in a spacemedia and technologythat we very firmly believe is central to our development going forward."

McCall: "We respect the people at paidContent. We have known Rafat for a long time and really have admired the integrity that paidContent brings to content. It's a very good fit for the Guardian. And so it fits just incredibly well into the strategy of escalating what we do digitally. Working with an organization like yours, where we'll be learning from youand I hope you'll be learning different skills from usthere are things where we can add a lot of value to paidContent, but there's a lot of value that paidContent can add to the Guardian."

Fit with Guardian: Brooks: "Thanks to the web, we have a large international audience, which we never had when we were simply a newspaper business. A third of our audience is in the States and what we are looking to do is not only build breadth by building international reach but also to build depth by building international influence. That will be partly through what you might call our core editorial endeavorsreporting on international politics, international business, the environmentbut also in key vertical areas where we believe we can really add depth and one of those is media and technology. This acquisition sits firmly in a strategy for this company of building a business that has international revenues and international content, not just driven from London. ... From our point of view, it's worth saying, it's the first time Guardian News & Media has ever bought a business outside the UK." He added later: "This all sounds a bit cliched and glib but it is the start of a new era for my company." More after the jump...

Acquiring versus investing: It's well known that we were raising a second round and The Guardian could have invested rather than acquire. Why not? Brooks: "We're not a venture capital company. We're a media company. That's the simple fact." McCall elaborated a bit: "We're not keen on strategic investing because my position is very much a GMG Guardian Media Group view of the world, which is that with strategic investments and minority share holdings you can't really drive anything ... you don't really feel like it's part of you and they can take up a lot of time and they can take a lotof trouble and you don't have much impact. It's just not something that we do and we don't have really any minority investments at the moment and we have got rid of all of our minority shareholdings."

Won't merge sites: Brooks: "For the avoidance of doubt, there are no plans to merge PC:UK into MediaGuardian.co.uk. They both existed happily separately and they will exist happily separately under the same ownership. I think they complement each other, I think they will enrich each other, and I think between those we will be able to share traffic to mutual benefits. I think it's really importantwe are not trying to merge paidContent with Guardian.co.uk. It's much more of a business information service and we want to keep it with its distinct identity because that identity has been very carefully and painstakingly carved out."

Working together: When we spokes about working together on events or other ventures, Brooks said: "There's no point in forcing anything here if we're going to do things together, we're only going to do that if Nathan and Rafat thinks that will make for a bigger event or a better event. We haven't bought this company in order to force it in to some kind of preconceived pigeonhole that we have ready made for it."

Market conditions: ContentNext's business model is mixed between advertising, reports and events but I asked McCall - why buy another ad-based business in today's environment? McCall: "I think that the economy is really very weak in the UK. I can talk about the UK with far more knowledge of it than I can about the States but, from what I know about the States, it's not that much better. I think it's going to be very, very difficult from an advertising point of view. ... What's very interesting about paidContent and your model is that you have got events and conferences. And although conferences are affected by client budgets, big, calendarized events tend to be more significant. And I think the other very interesting thing about your model is that you are in India and you are expanding so you're in a growth phase." McCall also talked about the advantages of being owned by a private trust rather than a public company or the BBC. "We are able to take a long term view of businesses in a downturn and we will not make decisions to the short term. We will not cut back too hard or too brutally in order to show a quarterly performance or six-monthly performance to please investors ... it's about a very long-term view. Companies that take that view will emerge from this recession, this downturn, this very severe downturn, in much better shape than companies that have to cut to the bone in order to survive."

International plans: The common interests the companies have in UK, US and India are a major part of the fit. McCall: "India is an emerging market and doing incredibly well, I should think, and there are great opportunities there ... I think we could help each other in India because we've been looking at that market long and hard."

More acquisitions?: McCall: "I think this is an interesting time to look at acquisitions because there will be some very interesting opportunities ... There will be assets coming out that will be very interesting, and at prices that will be more affordable than they were."


By Staci D. Kramer
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