Megalomedia Plc, the new media group in which Maurice Saatchi and his wife own a 19% share, is still on the acquisition trail. Within its first year of trading the company has attained a market capitalization of about 40m to 50m pounds. But anyone looking to buy a Megalomedia widget is out of luck. The idea behind the company is not to become just another old-style advertising agency, explained general manager Matt Nichols, but to be a catalyst to link up small businesses that are successful in their own right. It began by reversing on to London’s Alternative Investment Market through the acquisition of Josephine Hart’s – Mrs Maurice Saatchi’s – Graduate Appointments Services Ltd. The past 10 months have been spent accumulating interests within digital imaging for television and film, contract publishing, media recruitment, CD-ROM publishing and Internet services. Now Nichols said the group was looking towards a mixture of blue sky businesses – those such as Internet services that have so far shown little, if any profit, but have the potential to soar, and solid profitable companies. The group consists of interests in six businesses. Its original Graduate recruitment business had a good year with pre-tax prof its at 176,000 pounds compared to a 3,000 pound loss last time, on revenue that rose 32% to 1.8m pounds. In December Megalomedia acquired a 40% shareholding in The Framestore Ltd, a 10 year old digital imaging for film and television facility, for shares and a 50% stake in Forward Publishing Ltd. The acquisition of interests in Forward, who’s results were adversely hit by a contract termination, and Framestore took place late in the year, so have yet to make their presence felt on the current fiscal. But after 71,000 pounds exceptional costs incurred to joining AIM, group pre-tax profits increased 209% to 309,000 pounds.
In April a 10% stake in multimedia titles and software developer, The MultiMedia Corp Plc, was acquired. A month later a 7% stake in Cyberia Cybercafe Ltd joined the expanding group. In June Megalomedia raised 5m pounds via a placing of shares to Robert Fleming & Co Ltd to finance further expansion in new media areas. It began by acquiring the remaining shares in Soho, London-based Framestore in a deal that valued the firm at about 12m pounds and involved a complex exchange of shares, loan notes, cash, and options to buy Megalomedia shares. The acquisition constituted a reverse takeover, but shares have since been re-admitted to AIM. And at the tail end of last month Megalomedia snapped up an 11% stake in London-based Web site designer a nd Internet services group Webmedia Group Ltd, for a 400,000 pound cash and shares deal. Under the terms of the deal Megalomedia has the option to acquire a further 9% stake on similar terms. Founded in 1994, Webmedia Group is the holding company for Web site designer Webmedia Ltd, Internet domain name registration service Netnames Ltd, and Internet specialist Webcontent Ltd. Webcontent Ltd, which recently launched MovieWeb and ComedyWeb, plans to launch StudentWeb, a Web site aimed at past and present students aged between 18 and 34 to offer some type of careers service. Now Megalomedia says it will start to build up the network. By March Nichols expects to have made another four of five investments in various types of firms and is in t he process of setting up a new media division to spearhead the group’s efforts. Meanwhile, Future Publishing Plc, along with News International Plc and the Mirror Group Plc has put its weight behind the launch of New Media Marketing & Sales, a bureau dedicated to new media, such as Internet advertising, which opened its doors to business in London last month. The company intends to market the medium to advertisers and agencies, selling advertising across a package of audited Web sites. With th e Internet still so much in its infancy, Nichols realizes that the whole venture is a gamble, but as he said, if its a widget you’re after, you’re knocking on the wrong door.
By Louise Williams
