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Catena Media completes strategic review with sale of Italian operations

| By Richard Mulligan
Catena Media has announced agreements to sell its Italy-facing operations for almost €20m as it completes a strategic review launched 18 months ago.

Catena Media has agreed the deals with two different buyers for a total of €19.8m ($21.7m/£17.3m). It said one of the transactions has completed and the other will do so before the end of 2023. On Wednesday (22 Nov) it was confirmed Oddschecker Global Media was the purchaser of the flagship Superscommesse brand.

Catena Media said the deals mark its exit from Italy and complete the strategic review initiated in May 2022. Catena has sold €76.0m of assets since then, including the €45.0m divestment of AskGamblers to GiG in December 2022.

The review has sought to streamline the business and increase the operational focus on stable markets, primarily in the Americas. Catena said sale proceeds will primarily be used to repay debt, thereby reducing its leverage ratio.

The group’s Italian operation generated revenue of €7.8m and EBITDA of €3.4m in the 12 months to September 2023. The Italian transactions, including Superscommesse, will give rise to an impairment charge of €2.7m.

The sale of the Italian business came as the group also today announced a 28% year-on-year drop in revenue. This was, it said, primarily reflecting a strategic transition of some contracts in North America from CPA to revenue share. At the end of the period, on 30 September, reported net debt stood at €25.4m. After adjustment for a scheduled inflow of €46.6m in divestment proceeds from 2023 to 2025, the group had a net cash position of €21.2m.

Catena Media CEO doubles down on Americas focus

Discussing the Italian sale, CEO Michael Daly said: “We are pleased today to have secured a positive outcome for our Italian brands. We believe their new ownerships will provide them with the right environment to prosper and grow.”

The aggregate purchase prices for the sales will be paid in three tranches. Some €12.8m is due in October and November of 2023, while €3.5m will xome due in Q4 of 2024 and €3.5m in Q2 of 2025.

Catena Media now active in 27 North American jurisdictions

The group has completed a series of deals since announcing the review in May 2022. It has also sold UK and Australia assets for €6.0m and others worth €5.2m. Catena Media recently launched in Kentucky, which expanded its operations to 27 US states and Canadian provinces.

In a busy period for the business, it has also begun a SEK100m share buyback programme and issued new shares.

In August, the group said that cost savings of around €3.8m-€4.2m would be achieved within the scope of the review. This would be largely through streamlining support functions in the group’s European operations.

Catena Media added in a statement: “This realignment of the business reflects Catena Media’s belief that stable, regulated markets offer the best framework for long-term engagement and sustainable growth over time.

“Today, those markets are concentrated primarily in North America, which will be the focal point for the group’s growth strategy going forward.”

Catena Media accepts “short-term earnings impact” in Q3

Catena said its Q3 results showed a short-term earnings impact ahead of achieving a stronger financial position. This would, it said, enable the transition to a more sustainable revenue model.

Revenue from continuing operations was €15.9m, which was a fall of 28%. Within this, revenue from North America fell by 29% to €13.3m. North American income was therefore equivalent to 84% of group revenue from continuing operations.

The group said greater competition adversely impacted revenue, as did operators cutting marketing spend due to a greater focus on profitability. Within sports betting, pressures were lifted by operators moving to protect margins by dropping the CPA rates they pay. In some cases, CPA rates were as much as 25% lower compared to the same period last year.

During the quarter, Catena Media took its first major step to shift some cost-per-acquisition (CPA) contracts to a revenue share model. In the quarter, around 17% of new depositing customers in North America were recruited under revenue share. Catena said the rebalancing will secure a more sustainable revenue inflow over time.

Adjusted EBITDA from continuing operations fell by 65% to €3.1m, corresponding to an adjusted EBITDA margin of 19%.

“Greater competitive pressure is inevitable as new players enter the arena, attracted by state legalisation processes and solid sector fundamentals,” it added.

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