New Media Write-Offs Cost Chrysalis
The well-documented fall-out in the internet market has reached Chrysalis as the company today announced that it will be ending all new media investments bar its sports network Rivals.net. The write down to Chrysalis’ accounts for the year will total £9.6 million and this does not include trading losses incurred by the New Media division throughout the year.
Chrysalis is seeking strategic partners to further develop the Rivals business into new territories and onto new digital platforms and intends to appoint an advisor to assist the process in the near future.
Meanwhile Chrysalis Radio is having a strong year, with revenues anticipated to be up 16.6% at £43.4 million for the year to 31 August. During the same period audience levels rose by 12.5%. The figures are ahead of the industry as a whole which is expected to show flat growth across the period, the company said.
Chrysalis is confident that it can continue to outperform the market, despite the difficult trading conditions, given the continued organic growth potential of it stations. Current and planned marketing activity is aimed at delivering further audience growth over the next twelve months.
At midday today shares in Chrysalis were down 26p at 174p.
Comment
Chrysalis is the latest in a growling line of media companies that have been forced to knock back their new media investments after failing to extract any significant revenue from internet enterprises.
IPC Media recently shut down three sites at the cost of 90 jobs (see IPC Media Closes Online Businesses Costing 90 Staff); radio group GWR has dropped 46 jobs in reduction of internet investment (see 46 Jobs Go As GWR Restructures Internet Operations); EMAP recently sold its Digital Travel division to Online Travel Corporation (see Emap Offloads Travel Websites For £2.8m) and prior to that had cut its digital spend a number of times; Carlton has closed its Jamba and Popcorn entertainment websites and Granada has pulled the plug on Wellbeing, a joint venture with high street retailer Boots (see Carlton Interactive To Close Websites).
The problem for media groups relying on content-based websites is that a standard revenue model has not yet really been conceived. Some sites – the Wall Street Journal, for example – do operate on a subscription basis, but that is certainly not yet the norm. Internet users are now used to having access to a wealth of information and editorial free of charge. Furthermore, if a resource is subscription-based on one site, it is probably free in some form elsewhere. If not, cut and paste and email transfer vast quantities of information from just one source very quickly.
How, then, to make money from content? The real opportunity for Net-based revenue is not in content and its associated advertising, but in the sale of goods and services and, perhaps most suited of all, specialised customisable and searchable online databases and resources.