The owner of the Daily Mash has bought student news network The Tab for £750,000 and said its first order of business is to get it into profit for the first time, despite previously receiving millions of pounds in investment.
The Tab operates a national news website and 32 sub-sites at universities across the UK. It has a ten-strong central content team in London who produce articles and relies on student volunteers for the rest.
Tab Media made a loss before tax of £0.4m on revenue of £1.2m in 2019, and it had gross assets of £0.6m as of 31 December, according to its unaudited management accounts.
It received about £4.5m in investment in 2017, but has never made a profit. Investors included Rupert Murdoch’s News UK, which ran the student news group’s programmatic operation, and investment firm Balderton Capital.
Digitalbox, which also owns the satirical Daily Mash and the Entertainment Daily website, has now bought the full share capital of Tab Media and plans to raise £1.2m through subscription shares to fund further acquisitions.
Digitalbox chief executive James Carter told Press Gazette the goal was to get The Tab into profit for the first time before investing in its growth.
He said that since Digitalbox bought The Daily Mash in early 2019 they had “grown traffic and revenue whilst allowing the editorial team to get on with what they do best” and that they will now drive traffic and ad revenue in the same way for The Tab using their platform.
Carter said: “Our focus will be around efficient revenues that make money. It’s worth noting that The Tab historically hasn’t made a profit so that’s the first thing we need to fix, to move it into profitability.”
He added that he would move focus away from The Tab’s branded content operation, an area of advertising that he said it is “historically quite difficult to make money out of”.
He pointed to The Telegraph’s decision to close its commercial content unit Spark earlier this year with the loss of almost 100 jobs, saying: “If a big operation like that can’t make it work then it’s a struggle for smaller operations and we very much recognise that.”
He added: “We’ll continue to work and deliver around branded content solutions that are in place that people really want to deliver with us, but the initial focus will be around improving the commercial efficiency of the business, getting to a profitable position and then starting to invest more in growth of the audience.”
The existing editorial team will stay in place, with Tab founder and chief executive Jack Rivlin moving to a consultancy role.
Carter said there were “absolutely not” any plans to make cuts, adding: “The ambition is to invest in it going forward. It’s just the first stage of our growth has got to be proving that we can deliver a profitable model rather than a loss-making model…
“It’s had quite a significant amount of investment over the past three to four years to the tune of around £4.5m, so the moment is now to recognise the value that investment’s created in the business and make sense of that.”
Carter also said he intended to preserve the cheeky tabloid-style identity of The Tab, pointing to its current coverage of students locked down in university halls to show it is “good at what it does”.
“We may open up more content verticals when we start to invest in it more and think can we get more serious about politics, for example, or can we get more serious about other content areas, but at the moment there’s no ambition really to change what it’s doing,” he said.
“It’s a mix of news that works really well and engages really well, so I think we want to stick with it and build it.”
Rivlin, who founded the site in 2009 when he was at Cambridge University, said in a statement: “I’m thrilled The Tab is joining such an exciting and fast-growing company, which has proven it can combine influential brands, huge audiences and a profitable business model.
“We received a number of bids during this process, but Digitalbox stood out as a business with a fantastic track record, run by extremely trustworthy people.
“This is an important moment for our staff and our huge network of student journalists, who are now part of a company destined to become a major force in the media industry.”