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Independent eyes acquisitions as it marks fourth year of profit despite Covid-19

Press Gazette

Financial results at The Independent for 2020 show Covid-19 has not stopped it achieving a fourth year in profit since going digital-only.

The news brand is now understood to be looking at making its first acquisitions, with discussions ongoing with media and technology businesses with the aim of making it a “global media empire”.

The 35-year-old title will mark its fifth anniversary since going digital-only, following the closure of its daily and Sunday print titles, on 27 March.

Independent Digital News and Media made £2.7m in pre-tax profits in the year to 27 September 2020, up 17% from £2.3m the year before, and operating profit grew by 18% to £2.7m.

Revenues were up 12% to £30.3m, with advertising revenue up by £2.7m, or 14%, according to accounts filed with Companies House.

Chairman John Paton (pictured, right) told Press Gazette the figures look positive for the company’s aim to reach £100m in revenue three years from now.

[Read more from John Paton: The ‘happy warrior’ making quality journalism pay at The Independent]

Between October and January this year, according to unaudited figures seen by Press Gazette, the company has grown revenue by 29% year-on-year to £13.6m in the period– 15% ahead of budget. Advertising revenue grew by 19% in this period.

Profits of £2.4m between October and January were ahead of the budgeted £508,000.

The news brands four-pillar strategy for the current financial year sees it:

  • expanding globally through partnerships and foreign-language editions
  • building reader revenues including e-commerce, subscriptions and donations
  • selling content to businesses through licensing and syndication
  • And providing digital services like content aggregation, monetisation and data management to an increasing number of corporate clients.
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Independent chief executive Zach Leonard (pictured, left) said in a statement alongside the Companies House accounts that the growth in ad revenue was due to the “continued expansion of strategic advertising partnerships”.

“Most competitive news media are reporting single or double-digit year-over-year revenue declines, and agencies and brands are pausing spend or deferring until 2021,” he said.

Some 68% of The Independent’s revenue currently comes from advertising and it hopes to reduce this to 60% over the current fiscal year – but programmatic in particular continues to grow despite Covid-19.

‘You have to invest’

Asked why The Independent had struggled less with the decline of advertising than some other publishers, Paton pointed to a commitment to quality journalism from a newsroom that has doubled in size in five years  and knowing how to monetise that content – whether it is a report from Beirut or celebrity story.

“We’ve invested in the programmatic teams, we’ve invested in data management platforms, we’ve invested in our data skills and our data team and using all of that to monetise the audience we get with that quality content,” he said.

“All of that comes together and you see the kind of numbers we’ve got consistent here up every year in total revenue and in advertising revenue since 2016… that’s the end result. You’re going to have to invest.”

The Independent now employs 115 journalists, up from 101 at the end of September. This is due to rise to 125 shortly when US hires put on hold due to Covid-19 go through.

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Reader revenues

Reader revenue, which makes up 5% of the current total turnover, was up 40% in 2020.

The Independent launched a premium subscription in September 2018, with unlimited ad-free access currently costing £8.99 per month.

Leanard said the publisher’s plan is to boost reader engagement by encouraging anonymous users to become “known” customers, with the intention of building “more first-party audience data as the threat to third-party-dependent advertising looms in 2022”.

Leonard added: “The group’s significant strength in licensing and syndication, as well as off-platform revenues from social media channels like Facebook or Twitter, have also helped offset any revenue declines in advertising.”

Licensing and syndication revenue grew by 27% year-on-year between October and January.

The Independent claimed to reach an average 100m unique visitors each month through the 2020 financial year, up 30% year-on-year. It said tens of millions more consumed its content through partnerships with Yahoo, MSN, Facebook, Apple News and Twitter.

 [Read more: How publishers including The Independent are winning from the Covid-19 online shopping boom]

The majority of The Independent’s readers are now in the US, although half of its revenue (£15.1m) came from the UK and a third (£9.9m) from the US and Canada in 2020.

Independent expansion plans

Already this year the company has launched Independent TV and  international expansion has continued with the launch of a Spanish-language edition aimed mainly at Hispanic communities in the US and at Latin America.

An Asia edition is due to launch soon, with a team now hired in India and more roles due to open later in the year. Other global editions are already live in Arabic, Turkish, Farsi and Urdu.

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[Read more: Independent’s man in Russia fears Covid-19 surveillance will make investigative journalism harder]

The news brand is now in early discussions to make its first acquisitions, which it hopes will happen this year.

Press Gazette understands the company is looking in the UK, Europe and US and hopes to ultimately put The Independent brand at the heart of a global media company.

Conversations have also begun for smaller deals in tech sectors like ad-tech, marketing tech and data that would add-on to the new empire.

The Independent is owned by proprietor Evgeny Lebedev, who also owns sister title the Evening Standard. The free paper’s financial results are published separately.

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