MEDIA monitoring group iSentia (ASX: ISD) has issued a negative profit warning and has written off the value of its troubled content marketing business, King Content.
iSentia says full year guidance is now expected to be $155.1 million which is well down from its earlier estimates of $162 million, while underlying EBITDA is expected to be $41.5 million instead of $44 million.
"While it is disappointing to have to provide this lower earnings update for FY17, looking forward, we have put in place a number of initiatives to improve our operating performance across the business," says iSentia CEO John Croll.
iSentia bought King Content in 2015 from founder Craig Hodges for $48 million but the business struggled with poor decisions on client retention and business strategy.
In just two years, the King Content brand will disappear as iSentia reported the value of its full write down for the business will be $37.8 million.
Its offices in New York and Hong Kong will be shut down and the remainder of the loss-making business will be pulled in under the iSentia banner and staff will be cut.
"While we are clearly disappointed with the performance of the business during FY17, particularly the King Content operations, the board and management remain confident in the market positioning and growth potential for iSentia," Croll says.
ISD shares took a hammering on the news, and towards the end of the trading day on Tuesday had plummeted more than 22 per cent to $1.73. In October 2016, its shares traded at $4.04.
Business News Australia
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