Time Out IPO more fringe than West End

June 10, 2016

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.

Time Out, the urban nightlife bible, is being hauled into the 21st century. The loss-making magazine plans to raise 90 million pounds on London’s junior AIM market. A tough outlook for ad sales means it now needs to persuade users to book tickets on its website, though its track record hasn’t been great so far. Online booking is a crowded field and the price it is asking looks high.

The company’s print glory days are over – it’s now free in New York and London. So, faced with an 18.5 million pound operating loss last year, the plan is to try something new. Some of the money from the initial public offering will be used to pay down debt and upgrade its software. It will also spend around 15 million pounds promoting the site as a platform for bookings. Last year’s loss was partly down to investing online.

Online ticket sales haven’t been Time Out’s strong suit. Its online and print editions reach around 111 million people a month, but only 1 percent of online readers make any kind of purchase. Growing that figure to 4 percent would lead to a seven-fold increase in e-commerce revenue to 22 million pounds by 2018, according to research from Liberum, the IPO’s bookrunner.

If only others didn’t have the same idea already. U.S. travel website TripAdvisor spent $692 million on selling and marketing last year. A search for London theatre tickets returns sites such as London Box Office, See Tickets, Ticketmaster, Lastminute.com and LOVEtheatre. Time Out at least has its brand name, which could give an edge over the upstarts. And its old-school print journalist management has been replaced with a more e-commerce savvy team.

The shares are not a hot ticket, though. Time Out will have an enterprise value that’s 4.2 times its forecast revenue this year of 35 million pounds. That’s a discount to profit-making TripAdvisor’s 5.6 times, but a significant premium to more established e-commerce players Expedia and Yelp. That has the ring of a fringe performance at West End prices.

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