Stars in their eyes: Irish Media and advertising sectors set for rapid growth

Ireland’s media and advertising sectors are recovering well from the effects of the pandemic and deals are on the agenda again.

For many people, the COVID-19 pandemic presented the opportunity to binge-watch all those TV shows and movies they had wanted to watch but never got around to. With more time on their hands – and fewer external distractions – viewing figures for streaming services rocketed.

But for those producing the TV shows and movies that were watched in such numbers, the pandemic brought unprecedented problems. For a medium that relies on people being in close proximity, the lockdown was bad news and, understandably, the sector almost ground to a halt, at least during the initial stages of lockdown.

Nevertheless, now social distancing measures have been lifted, the sector is bouncing back strongly. Figures from state body Screen Ireland estimate that the TV and film production sector contributed €289 million to the economy – in terms of employment, goods and services – in the first six months of the year. This figure was more than the entire contribution of 2020 – €213 million – and looks set to beat the record annual production contribution of €357.6 million set in 2019.

Part of the reason for such high figures in the first half of the year is that there was a backlog in production from 2020, which, with the lifting of social distancing measures, has increased in pace. For example, Disney film Disenchanted has been filmed on location in Ireland this year, as well as a raft of independent movies and big-budget drama series earmarked for broadcast on RTE later in the year.

“Despite the immense challenges the industry has faced throughout the pandemic, production activity levels are experiencing a strong recovery,” said Screen Ireland’s chief executive, Désirée Finnegan. “This is indicative of the strength and creativity of the Irish industry… and the increasing global demand for content. In practical terms, the production activity has generated a substantial contribution to the economy, created significant employment opportunities and ongoing skills development, ensuring that those working in the industry continue to progress and excel.”

The uptick in production has meant film and television production facilities look attractive to acquirers again. In August, Troy Studios in Limerick and Ardmore Studios in Wicklow were acquired by a US and UK consortium comprising Hackman Capital Partners, its affiliate The MBS Group and Square Mile Capital Management for an undisclosed sum. The consortium owns the largest independent studio and media portfolio in the world, with about €3.6 billion worth of assets under its control.

Both facilities are substantial; Troy Studios has 100,000 sq ft of stage space, plus another 250,000 sq ft dedicated to production support, while Ardmore Studios boasts 140,000 sq ft of sound stages.

Following the deal, both studios will continue to operate under their existing branding, with the management and staff also remaining in place.

Acquisitions

As economic conditions have strengthened this year, so dealmaking has returned to the agenda in other areas of the sector. Perhaps the most significant deal this year was London-based Bauer Media Audio’s entry into the Irish market with the completion of the acquisition of Communicorp, the biggest commercial radio group in Ireland, in June.

Communicorp’s portfolio of stations has a weekly audience of more than 1.75 million. The group comprises Ireland’s only national commercial radio stations, Today FM and Newstalk, alongside local stations Spin 1038 and 98FM in Dublin, and Spin Southwest in Limerick, as well as digital radio sport station Off The Ball, digital audio exchange audioXI and aggregated listening platform GoLoud.

The deal, for an undisclosed sum, strengthens Bauer’s position in the European commercial radio market, with more than 57 million weekly listeners in eight countries.

More recently, media company Business Post Group shelled out €7 million to acquire polling company Red C.

Red C will now become part of Business Port Group’s Data & Insights pillar, although it will remain an independent company under its existing management team, but it will work with other parts of the Business Post group.

The deal is part of the Group’s expansion plans to become a group of businesses focused on media, events, data and technology services, according to its website publisher and chief executive Enda O’Coineen, as reported in The Independent. [www.independent.ie/business/irish/business-post-group-buys-polling-company-red-c-40838988.html]

Media advertising

The pandemic also hit the media advertising sector hard. As ever in any times of financial trouble, advertising spend is one of the first areas to be cut, as it is one of the easiest measures to take.

Marketing and communications company Core reported that overall advertising spend in Ireland dropped by 14.2% to €903.1 million in 2020 in its annual ‘Outlook’ report, published in March. But this could have been worse; in the second and third quarters, spend declined by 48% and 29% respectively compared with 2019.

But this also shows some of the resilience in the market – the first and fourth quarters performed well to mitigate some of the falls in the middle of the year when the lockdowns were at their strictest.

Core went onto predict that advertising spend would climb in 2021 by nearly 9% to €983.6 million. As in recent years, the growth in advertising spend will be driven by online, while print will continue its slow decline – Core forecast another 5% fall in revenue.

Investment

Businesses involved in media, marketing and advertising are also successfully raising money again. In July, Dublin-based digital marketing software company Xtremepush raised $33 million to fund its global expansion plans.

The funding, provided by London-based private equity firm Grafton Capital, along with a refinanced debt facility, is set to be used to double Xtremepush’s workforce to 140 in the coming 12 months. The jobs, which will be in Ireland and overseas, will be in software development, sales and marketing, finance and operations.

“This investment validates and recognises the calibre of our technology, our people, and the ambitious global growth plans we have for the company,” said Tommy Kearns, CEO and co-founder of Xtremepush. It will allow us to move ahead with our expansion in overseas markets, including North America, the Middle East and Asia. Xtremepush is now in hyper-growth mode. We want to scale quickly in all of these markets, both organically and through strategic acquisitions.”

Grafton Capital has taken a minority stake in the company.

Why invest in Irish marketing and advertising companies

Ireland’s media and advertising sector is well established. The country has been and remains a favoured destination for film and TV production companies because of its stunning landscapes and availability of local talent.

The sector is well backed by the government and state agencies and there is a wealth of talent in the country in a range of media roles.

With the Irish economy hopefully moving towards a post-pandemic phase, the prospects for continued growth in the media and advertising sectors are good. While the backlog of planned productions is clearing, there is still a lot of demand for high quality productions.

Likewise with advertising, as economic conditions improve then more companies plan to increase their spend on marketing and advertising activities to help boost sales of their business and take advantage of the growth in the economy.

But with the effects of the pandemic still being felt, there are likely to be some distressed businesses that can be picked up relatively cheaply that could, with some investment, be turned around.

Likewise, as businesses look to grow again, there will be many looking for external investment or acquisition to reach the next level of growth.

Advice

As mentioned, with such potential for growth going forward, there should be plenty of chances to invest in or acquire media, marketing and advertising businesses in Ireland. For those looking to invest, acquire an existing company or establish a new business in Ireland, then it is crucial to get the right advice.

To get the right advice, those looking to invest, acquire or establish should seek out advisers with specialist knowledge of the sector in Ireland – including its history, leading players and local norms. Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects from setting up a company to providing diligence services as part of an M&A deal or funding round in the sector.