Analysis of UK Merger Authority Stay on Gorkana Integration With Cision

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December 30, 2014 – Shortly before the Christmas break, the UK’s Competition and Markets Authority (CMA) announced that it was putting a hold on integration of the Gorkana media intelligence business into GTCR, the parent company of Cision.

The detailed enforcement order bans further integration between GTCR Canyon UK Investments Limited and Discovery Group Holdings Ltd pending the outcome of a competition investigation – “Blue Canyon” is the name of the legal entity that GTCR used to acquire Cision, and Discovery Group Holdings is the parent holding company for the combination of the Gorkana media database service, the former Durrants press clippings business and the media evaluation service previously known as Metrica.

According to the order, “the CMA is considering…whether it is or may be the case that a relevant merger situation has been created and whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition in any market or markets in the United Kingdom”.

GTCR-owned Cision announced in October that it was acquiring UK-based Gorkana Group Ltd. Cision’s private equity parent GTCR had previously also acquired US-based public relations and marketing solutions company Vocus, as well as social media software provider Visible Technologies, combining them under the Cision umbrella. Vocus had been growing well in the UK, while Cision had been reporting declining revenue.

PR news industry blog O’Dwyer’s reported on the initial announcement of the investigation, also quoting a statement from Cision CEO Peter Granat saying “We look forward to working with the CMA to ensure any questions they may have are satisfied and demonstrate that competition remains healthy post-acquisition.”

Due to the strength of its public relations industry, the UK makes up a significant part of the $2.2 billion global market for “media intelligence” solutions for PR and corporate communications professionals, as measured by the latest published Burton-Taylor International Consulting study of the industry (a new annual study is currently in preparation).

From analysis of underlying data compiled by Porter Walford Consulting for the study, the largest concentration of revenue for the combined Cision/Vocus/Gorkana operation is likely to be in the media monitoring segment of the market, largely thanks to the contribution of the former Durrants press clippings operation within the Gorkana group.

However, it would be hard to argue that the merger creates an anti-competitive situation in that segment. Precise Media is a sizeable direct competitor to the Gorkana media monitoring business and buyers have an abundance of other media monitoring options from vendors pursuing a variety of alternative approaches.

The lens of regulatory scrutiny may fall more directly on the segment of the market addressing journalist/key influencer contact management databases. Gorkana has organically built a strong following in this segment through its data quality, customer responsiveness and strong community-building between journalists and PR professionals.

Combining that offering with similar business assets from Vocus and Cision could give buyers some concerns; but again, alternatives do exist.

One niche UK competitor, DWPub, was quick to comment after the Cision/Gorkana merger announcement that “there is still a healthy amount of competition”.

Gorkana’s own revenue trajectory over recent years illustrates that it is possible for a vendor to transform its position in this segment; and there are no signs of insuperable barriers to market entry, as demonstrated by the appearance on the scene of niche local players such as PRMax, or the launching of the Meltwater Press service from much larger global vendor Meltwater.

There are also other major global media intelligence providers such as UBM’s PR Newswire or the Corporate Solutions business unit of NASDAQ OMX – itself incorporating other relatively recent market entrants such as UK-based Glide Technologies – which already have significant UK operations as well as firmly established capabilities in the key influencer/journalist contact management segment.

In the market segments for media measurement/evaluation and social media monitoring and measurement, multiple alternative vendors are again to be found, both local and transnational, and as with media monitoring, a variety of approaches are available.

In the press release distribution segment, the combined Cision/Gorkana/Vocus entity would not have a significant presence relative to other competitors. The Regulatory News Service (RNS), owned by the London Stock Exchange Group (and the channel for the CMA’s initial announcement of its investigation), has a very strong position in the UK market, with PR Newswire and Berkshire Hathaway-owned Business Wire also noticeably present.

The case could theoretically be made that the combining of Vocus, Cision and Gorkana would significantly reduce the range of integrated PR software solutions available on the UK market.

However, while many vendors may aspire to supply an integrated solution covering all parts of the PR workflow, in reality their target audience has a long track record of purchasing separate solutions to address different parts of their workflow, if they feel that a particular vendor has a superior offering to address a specific need.

Copyright © 2014 Porter Walford. All Rights Reserved.

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