Written by WestHouse Securities
Michael Infante, Chairman and CEO of One Media plc came in to tell us more about the company he founded in 2005. One Media acquires and exploits intellectual property rights, repackaging content from years gone by, using its proprietary software, so that it is ‘digitally ready’. One Media has a catalogue of performance rights over 200,000 music tracks generally from the 1950s-1990s, and 8,000 videos. This content is delivered to over 600 web-based music and video stores (such as iTunes, Amazon, Spotify and YouTube). Michael pointed out that the industry is now in the midst of another shift away from digital downloads towards streaming. The speed and ultimate effect of this transition are still in question and this has caused forecasts for 2015 and 2016 to be moderated at the time of the Company’s final results last week. With streaming there is no fixed price, but a minimum subscription fee. This impacts habits – for instance consumers tend to be more experimental with music choices. The effect on the type of content One Media owns is as yet unknown. To date it has been a case of an 80:20 rule, where 20% of content works hard and generates 80% of One Media’s income. Unlike other providers that cater to ‘hit’ music audiences, no one track/artist does more than 1% of One Media’s turnover. Outside of this core business, one Media has two other business areas: (1) ‘Sync’ a new part of the business that sweats the long tail of assets, by making them search-able and purchase-able for films etc. (2) an expanding video library (which currently consists of 8,000 programmes; there are more opportunities with tv/film content versus music to be ‘sliced and diced’ in different ways, such as creating short clips concentrating on certain scenes or themes…these are leveraged and monitised across YouTube.
The likes of YouTube and Spotify take a large chunk for the use of their platforms. However there seem to be plans afoot, albeit very early stage, for One Media to create an owned, more B2C offering as it is exploring technology options. Nearer term, we would expect more content acquisition in particular in the area of tv/film (which is only 5% of the current business). The Company has been finding that – similar to what was seen with audio content – tv/film content as it ages is becoming more available for acquisition. Given he owns c.35% Michael stressed that he is only interested in deals that he considers good value, and outlined a number of transaction structures that are persuasive for current owners. The next 12-18 months will be a very interesting time for the Company and though organic growth expectations have been moderated, further content acquisitions alongside the build-out of technology to enable more B2C (such as apps) could add to growth potential.