Online and mobile adult content purveyor Interactive World (AIM: ITW) is buying Sport Newspapers, publishers of the nudie-laden U.K. tabloids the Daily Sport and the Sunday Sport for GBP 50 million ($101 million). The merged group will become a publicly-listed company on London’s AIM, trading under a new name, the Sport Media Group.
Interactive is hoping the buy will be a springboard into offering increased content both online and over mobile. For their part, the owners of the Daily Sport and the Sunday Sport may well hope that the digital buy will help reverse declining fortunes in its print business: the two papers have had a progressive drop in circulation and today only control around 1.6 percent of the country’s “red top” tabloid market. The Scotsman says the newspapers believe the decline could be down to a lack of “solid editorial,” but it’s unclear whether being bought by an adult content company will really do much to improve that end of things.
The two companies already have a close working relationship: David Sullivan, a co-founder of the Sport Newspapers (along with David and Ralph Gold, owners of the Ann Summers adult shop chain), is also a 49.95 percent shareholder in Interactive, but is understood to be selling that stake for about $30 million. Sport Newspapers had pre-tax profits of $5.7 million for the nine months to May 31 on revenues of $39.7 million, giving the transaction a multiple of 2.5. Interactive World posted pre-tax profits of $8.7 million in the year to 31 July, 2006.
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