New management contract - TheLondonEconomic

RNS Number : 5379J

Iconic Labs PLC

14 April 2020

 

Iconic Labs PLC

14th April 2020

14th April 2020

Iconic Labs Plc ("Iconic Labs" or the "Company")

New management contract - TheLondonEconomic

Iconic Labs Plc (LSE:ICON) (the "Company"), a multi-divisional new media and technology business, today announces a new management contract with a prominent liberal, pro business digital newspaper.

Iconic Labs has entered into the management contract with 'TheLondonEconomic' (TLE) . TLE is a high profile digital newspaper with full content across all areas but is particularly well known for excellent political journalism and commentary.  It had the most-shared political story on social media during the 2017 election, beating The Independent, The Evening Standard and The Guardian.

Iconic Labs now manages all commercial aspects of the TLE brand and is also involved in assisting the TLE team in their general day to day management of the business. In consideration, Iconic receives a monthly retainer fee, and in addition will be entitled to an amount equal to 25% of TLE's profits.

The contract commenced today and is for an initial period of one year, following which it renews automatically every 12 months until terminated by both parties.

Liam Harrington, Chief Business Officer of Iconic Labs, said : "TLE is a fantastic brand that is growing in popularity every month and has established an impressive market position with an excellent and loyal readership. But we think this is only the start for TLE and are excited about its potential to move to a different level in terms of audience and in terms of revenue. We have been speaking to the management team for many months and we are delighted to beat out a lot of competition and sign this deal."

"We see a lot of parallels with UNILAD here as a very engaged brand but noteably more credibility and reach with  an affluent, pro-european, pro-business audience. We have immediate plans to take advantage of 'low hanging fruit' through increases in traffic and programmatic revenue. However, the bigger prize is in further ways to monetise the brand such as e-commerce, content licensing and B2B marketing. These are all areas as yet exploited by TLE. This agreement gives us the chance to take our skills and experience from UNILAD and apply them to turn an already successful digital publisher into a worldwide digital brand and achieve its revenue potential."

John Quinlan, Chief Executive Officer of Iconic Labs, said : "TLE is an ideal vehicle for the team, and  the perfect strategic fit for Iconic Labs. TLE brings great revenue opportunities itself, but is also exactly the sort of brand, and has the audience, that the wider Iconic Labs will benefit from.

Importantly, the agreement enables Iconic Labs to share in the upside through our entitlement to an amount equal to 25% of the profits of TLE, while risking no capital and ensuring through the monthly management fee that our costs and time are always covered.  The agreement cannot be terminated by TLE without cause or agreement by Iconic Labs.

The restrictions on TLE's ability to terminate the agreement also ensures that if TLE is sold, then because the agreement continues in place  Iconic Labs can continue to enjoy the same economic terms after the sale as before.  Should this agreement prove as advantageous to Iconic Labs as we anticipate, then we may replicate the model elsewhere."

Jack Peat, editor of TheLondonEconomic, said : "We are extremely pleased to be moving into our next growth phase with the expertise and knowledge of Iconic Labs on our side. After seven years of solid growth we know TLE is well positioned to move to the next level, building on the brand's trusted reputation within the market to grow our audience and build new relationships with brands looking for access to urban, educated, professionals.

In seeking to do this, we took a decision that the opportunity was too great for us not to give ourselves the best chance for success.  We believe that the Iconic Labs team of John Quinlan, Liam Harrington and Sam Asante understand better than anyone how to grow and monetise a digital publisher.  Further, their track record at UNILAD in building the world's largest social media publisher (on even less capital than we have had) demonstrates their ability not just to understand the market, but to execute on a plan.  We are delighted that the deal has now completed, this it is the opportunity we have always wanted, and comes at a time when both digital distribution of news and the ideas and values of TLE are more relevant than ever."

Note to Editors: TheLondonEconomic and Deal Structure

The London Economic ("TLE") is a digital newspaper, which is verified by Facebook,  supporting liberal, progressive, pro-European and pro-business viewpoints.  It was founded in 2013 by two experienced journalists, Jack Peat and Joe Mellor, and has become one of the most influential digital newspapers in the UK, with a reputation for honest and diligent reporting and a distinctive voice.

In addition to news and politics, the publication has expanded to include sections covering property, food, sport, film, music, travel and lifestyle. These developments have been successful but also constrained by a lack of capital. However, a recent investment has been made with the intention of enabling TLE to expand its content and reach.

TLE currently achieves more than 3 million page views per month and has a user demographic concentrated among urban, educated, professional users, a key market for brands and advertisers.  Since having the most shared story during the 2017 general election TLE has continued to achieve high levels of traffic, driven by increased political engagement over recent years. TLE management believe this growth will continue, and they will also likely see an increase in engagement due to the large amount of consumer interest in online content during the current COVID-19(Coronavirus) crisis.

TLE has also been profitable for several years, but its management believes that its true impact and commercial potential has yet to be achieved.  Management identified lack of capital and expertise in monetising digital media as its two weaknesses.  They rejected several offers to invest in or purchase TLE, and identified Iconic Labs as their ideal partner. They therefore approached Liam Harrington in October 2019 to both make an investment in TLE and provide commercial support.

At that time, Iconic Labs did not have any spare capital to invest in TLE and so the board decided to initiate discussions with Greencastle Capital to see whether Greencastle Capital could invest the funds needed to make an investment in TLE.

Greencastle Capital is managed jointly by David Sefton and Paul O'Donohoe. It is owned by Linton Capital, a 15 year old private equity business, which is owned by David Sefton, the former Chairman of Iconic Labs, and he continues to work with Iconic Labs.  David's ownership of Linton Capital pre-dates the existence of Iconic Labs, is run entirely separately from the Company and the investment has been funded in its entirety through a capital injection by David Sefton.  Linton Capital and Greencastle Capital have no financial or other interest in Iconic Labs, and the only potential beneficiaries of Greencastle Capital's investment in TLE are Linton Capital, David Sefton and Paul O'Donohoe.

The structure proposed by Iconic Labs and settled on between Greencastle Capital, Iconic Labs and TLE involved Greencastle Capital acquiring a majority stake in TLE, with Iconic Labs providing its commercial expertise to TLE in exchange for a monthly management fee plus expenses and an amount equal to 25% of TLE's profits. 

Greencastle Capital and TLE have now completed Greencastle Capital's acquisition of a majority stake in TLE, with Jack Peat and Joe Mellor being the other shareholders of TLE and continuing in their roles as TLE's executive directors. David and Paul will join the board of TLE.

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to constitute inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

**ENDS**

For further information, please visit the Company's website www.iconiclabs.co.uk or contact:

Damon Heath

Shard Capital Partners LLP

Tel: [phone]

  Iconic Labs     [e-mail] 

 

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