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Affiliate Monitor The great divide
The great divide
● Show us your medals ● Knit one , purl one ● Size matters ● Shop ’ til you drop
PART ONE
WHAT DOES IT mean when a sector leader by some distance appears to want to distance itself from the activity which remains its main source of revenue and profit ?
Such as the question posed by Better Collective ’ s most recent public pivot to become , as chief executive Jesper Søgaard put it during the company ’ s mammoth investor day presentation earlier this year , “ a digital sports media group ”.
The phrase was repeated during the first quarter earnings call and on the basis that it is worth following what companies say as much as what they do , it seems right to argue that statements to this effect are meaningful enough for the rest of the sector to take notice .
As discussed in April ’ s Affiliate Monitor , when talking about Better Collective ’ s evolution , its management team pointed to how the company was now intent on a diversification strategy , with the recent addition of the Skycon adtech business being a case in point .
“ We are diversifying and finding new ways of driving revenue ,” Søgaard said at the time . But the question remains the extent to which this is a strategy of rowing away from the sector or whether this is more about saying something about diversification in order to impress investors .
Or as one well-placed source within the affiliate sector put it , with Swedish fund managers having “ gone all ESG ”, is this simply a case of Better Collective doing some window dressing to “ get the local fund managers back on board ”?
SHOW US YOUR MEDALS
“ Were I in their shoes , I would be doing the same ,” says Will Armitage , co-founder at BestOdds . “ It ’ s been a theme for many a year now that the PE ratio of a pure affiliate business lacks the lustre and excitement of the more aspirational sports media company .”
By this reckoning , it is harder for companies to achieve a doubledigit multiple and for investors to be persuaded that it merits it if the company cannot attach the label ‘ media brand ’ to the stock .
“ Any shareholder will be very pleased if they are able to accomplish this transition to being labelled as a sports media conglomerate ,” Armitage adds . “ And given what it produces on an annual basis , frankly , it feels merited .”
Within the listed affiliate space , Better Collective isn ’ t the only company that burnishes its sports media credentials . Relative newcomer Playmaker Capital makes much of its online media iGB Affiliate Monitor