So would you invest in a service that still
has to prove itself or someone who has done it more than once and brings
ability to the table?
The troubled UK supermarket Tesco was forced
recently to refocused on its core business and as a result dropped its
potential universal media service offer Blinkbox. The film/video service was
acquired by TalkTalk for a reported £5million and Australian company Guvera entered
talks to buy the music service. This left the ebook business Mobcast, which it
bought for £4.5m from author Andy McNab and business partner Tony Lynch in September 2012. The Blinkbox ebook service only went live last March.
So would you buy Blinkbox ebooks or look at
alternative ways to invest less for more?
Waterstones went for the acquisition to buy
the ebook business from Tesco, but they failed to agree and parted. We now have
reports that Kobo are after their customer list which is a good option provided
they are active, the sales generated are worth the investment, the data itself
is in good order and of course the price is right. However, customer lists are not
exactly million dollar purchases and list brokers could probably offer a
cheaper and equally attractive demographic.
So the clock continues to tick and the
question must be whether Tesco will let it go in a fire sale and write off the
debt or will continue to strive to find a home for either the debt or the
service?
It hard to see how BlinkBox ebooks making the
return Tesco sought and decoupling the three media streams dilutes further any
value it had. Some would question how they had grown to 60 core staff, what on
earth they were all doing, the price they paid in 2012 and the level of effort
and cost they threw at it to rebranded it, repackaged it and re-staffed it. Some
would suggest a classic case of buying a pup and certainly something that they
could have achieved quicker and for less money.
The markets often don’t follow logic and when
someone wants to participate they often lunge for a quick fix and buy what they
perceive is a good buy. Due diligence is often hard when its about perception, interpretation
and gut feel and none of the major UK supermarkets have been able to bring to
market an effective digital media service and with their current refocusing its
hard to see them trying too hard moving forward. Waterstones is likewise
refocusing and continue to show little appetite, or ability, to take on
digital. Some would suggest that buying Blinkbox was never going to fit
Waterstones whatever the deal.
So today we hear Kieron Smith is joining
Blackwells. Now that’s a smart move by Blackwells and considerably cheaper and
wiser than buying a service that you would only spend a fortune on, to take
apart, to fight a battle you aren’t going to win.
Blackwells has always had a good history of
digital investment and although they have had their own challenges and very
difficult markets they continue to press forward. By acquiring the man and not
the service, they bring in someone with very strong digital credentials who has
done it before in the trade and someone who has proven his ability to adapt and
could well add another dimension to their existing market segments.
As pointed out on Dragon’s Den it is often
the person that investors should focus on and the service or product may be a
bonus.
