EMAP takes stock of its digital future

EMAP and C4’s joint digital venture is focused on the youth market, but both have the content to feed a wider range of niche areas.

EMAP’s joint venture with Channel 4 to create digital services for the youth market is the latest notch on the media group’s bedpost as it explores its future in the multimedia age.

So far the group has reportedly shunned the predatorial advances of dot-com paper players such as Yahoo! in favour of flexible joint ventures with bedfellows such as Channel 5, Capital Radio and even a firm of builders merchants called Wolseley Centers.

Its venture with Channel 4 is a long-term strategy that could see a closer relationship develop between the two.

EMAP Digital chief executive Paul Keenan says: “We have talked about a number of opportunities and we have focused on youth because it’s a core market for us.”

The joint venture, announced last week (MW June 1), brings together two companies which dominate the teen market in their respective traditional media – TV and magazines – with the aim of developing products in this multimedia age that are accessible to youngsters through whatever platform they choose.

UBS Warburg media analyst Simon Mays-Smith says: “In the past it has been sufficient to dominate one particular type of media. In the future, you will have to dominate networks or niches.

“The idea of the network is that teens are able to use whatever media format they like to access you.”

The new joint venture company will use elements of content from Channel 4’s branded youth programming zone T4, which has audiences of up to 2.5 million for series such as Hollyoaks and Dawson’s Creek, and EMAP titles including Bliss, J-17, Smash Hits, More!, Match, Computer & Video Games, Nintendo and PlayStation Plus. These titles accounted for 51 per cent of the youth market, selling 33 million in 1999. The first product will be a global youth website.

Keenan adds: “From an EMAP perspective this is the start of a relationship that could be extended beyond the youth market.”

Music, sport and lifestyle are other areas ripe for consideration. For many commentators the obvious tie-up would involve the best-selling men’s magazine FHM, which has a circulation of 702,514 (ABC December 1999).

MediaVest client services director Nigel Conway says: “It’s about forging closer relationships, and for EMAP it must also mean masthead programming.”

New PHD press director Laura James agrees, but says: “Channel 4 is quite a long way down the road and its websites are sophisticated, but they are desperate for content and seem to be chasing access points.”

It will also mean new opportunities for advertisers, by offering media neutral solutions targeting niche audiences, claims James.

EMAP recently restructured the way it sells media so that it can offer deals across its magazines, radio stations and websites that serve particular niche audiences.

But one media analyst says: “I think it is the future, but there’s a danger of getting to the future before clients are ready.”

For some the relationship between EMAP and Channel 4 could go further than a series of joint ventures. One press buyer says: “I would not rule a merger out in the long term.” For the present, C4 is wholly government owned.

Other analysts are sceptical and query whether EMAP would be financially able or willing to buy what would be a floated company worth several billion pounds.

EMAP has ear-marked £200m to £250m to be spent over the next three years on digital investments. It set up the division EMAP Digital last year to enter into joint ventures and partnerships.

Teather & Greenwood media analyst Simon Baker says: “EMAP has got a great deal of expertise in launching and setting up a business model for new titles and that is exactly what needs to be done for each new website and online opportunity.”

But Zenith Interactive Solutions managing partner Damian Blackden says: “It pays to keep your opportunities open as far as possible, as long as you make sure that the looser arrangements do not cost you a more significant business development.”

A joint venture could be turned on its head if a partner merges with a competitor behind your back. Bertelsmann found that to its cost when its joint venture AOL Europe collapsed after its then partner AOL merged with Time Warner.

Baker says: “The current strategy might seem relatively conservative compared with suggestions of global tie-ups. Nevertheless it is the right strategy for EMAP, allowing it to exploit its content.”

The possibility exists that EMAP itself will become a target for takeover as the Yahoo! overture suggests.

“It has taken EMAP some time to commit to the current strategy of digital investment. The thought of a tie-up with Yahoo! or takeover seems extremely unlikely without, in my view, it turning hostile,” adds Baker.

Yahoo!, although big on the Internet does not offer any TV interest, an essential component of the Time Warner-AOL deal.

According to analysts a tie-up with BSkyB or NTL would offer EMAP a much better long-term match.

But, with EMAP focusing on niche audiences, it is more likely to make an offer for part of IPC Media, the magazine company which has been put up for sale by venture capitalist owner Cinven. Rumours are already circulating that EMAP has approached a national newspaper about putting together a consortium to bid for the entire company.

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