Isenita, which acquired King Content two years ago for $48 million (which included the management earn out), will fully write down the value of the content marketing business. In a trading update today, Isentia said it is discontinuing the King Content brand and taking a $37.8 million impairment charge.
The King Content’s operations will be fully integrated into Isentia and its offices in New York and Hong Kong have been closed.
The board cited the poor financial performance of King Content during FY17 as the reason for axing the brand.
The company said its content marketing division is expected to report revenue of $14.2 million (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 also downgraded its full year guidance. The company formerly known as Media Monitors is expecting revenue of $155 million for FY17 below earlier guidance of $162 million, and underlying EBITDA of $41.5 million compared to earlier forecasts of $44 million.
“While it is disappointing to have to provide this lower earnings update for FY17, looking forward, we have put in place a number of initiatives to improve operating performance across the business,” Isentia CEO John Croll said.
“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.”
Isentia will report final FY17 results on 23rd August 2017.