On Partnerships, Joint Ventures, and Owning It Outright

By: Jacob Cohen Donnelly

Partnering or launching a joint venture feels nice. In theory, two groups work together to make an initiative successful. Two is, arguably, better than one. If you’ve worked in any industry—media or otherwise—long enough, you’ve likely discussed the potential to partner or form a joint venture.

A few months ago, an AMO Pro member asked in the Slack channel, “What are some examples of joint ventures between media companies and event companies? And what are some things to think about how these are structured + reasons to do it this way vs. another way?”

I’m not a fan of joint ventures in many respects because the incentives are not as great as you might think. Let’s use the event example. I’m looking to launch an event in the UK, so I partner with a local entity that owns other UK events to create AMO Events UK. We each own 50% of it.

So, we both get to work. I start building an agenda and finding sponsors, while my partner looks for venue space. We both start marketing. But then I need to spend more time on my subscription product, which I own outright, distracting me for a couple of weeks. Or my partner has a problem with another one of their events, which they own outright, and they reallocate logistics support.

Weeks pass and less work gets done. The marketing is poor, maybe the content’s lacking, and there are missing sponsorships. The event happens and it’s subpar. Then, AMO Events UK, which was supposed to be an amazing joint venture, fails.

Is there a way to get a partnership right?

Possibly. When I was at CoinDesk, we launched Consensus: Singapore as part of an Informa Tech event. We had no one there, so pulling off an event in a country requiring a 19-hour direct flight would have been really hard. We needed to expand into Asia due to its crypto growth, but we were a startup with limited resources. However, Informa Tech was already doing this event, so we slotted in where they “hosted us.”

We needed someone to manage logistics, secure the venue, and know the contractors. Informa needed someone to bring crypto money to the event. We were told how much space there was for expo and started selling it. There was a clearly defined revenue share based on both sponsorships and tickets. The outcome was that both parties got what they wanted.

How is this different from my AMO Events UK example from above? It’s subtle but important. In that scenario, we launched something new that we owned 50/50. In this CoinDesk scenario, Informa Tech was doing this event regardless. They wanted us involved, but would have done it without us. Because of this, they wouldn’t “take their eye off the ball” if you will. That made them a good partner.

However, it wasn’t the best scenario for Informa because we could have taken our eye off the ball. In fact, we did. In 2019, things got much harder in crypto and we had to put more effort into our owned & operated brands rather than this partnership. Then Covid hit and that was the death of that brand.

Another Slack participant shared their partnership approach:

There are circumstances when it pays to partner, which for us is never with event companies but with associations or universities. Sometimes they have an event that we can both make much larger and more profitable, but launching against them is politically risky. Sometimes it gets buy-in from marketers faster. And sometimes it takes a competitor out of the market. We’ve sliced the pie many ways – revenue share, profit share, fee-for-service. We just ensure the money’s worth it and try to get as much control as possible.

The key line is the last one: “we just ensure the money’s worth it and try to get as much control as possible.” The way to de-risk one of these partnerships is to control what happens. Informa Tech was going to do the event anyway, so their risk wasn’t that big. If we brought a ton of exhibitors and attendees to the table, everyone would win. If we didn’t, so be it. Control truly matters.

One final scenario emerged: partnerships as a precursor to M&A. As one member said, it “gives both parties time to get to know each other, build trust, assess value and can make integration easier.”

This can significantly de-risk an acquisition, but it can also introduce acquisition costs. As one member said, “if the media company, using its event resources, audience and industry knowledge significantly grow revenue and EBITDA, they end up paying more [on acquisition] than had they taken the risk at the outset.”

The longer the joint entity grows, the more it’ll cost to acquire it in the future. If M&A is the goal, weigh the potential cost increase against the risk of buying outright. It ultimately becomes a conviction game. If you believe this is a market or product you want, perhaps make the bet and prioritize it rather than just executing it on the side.

Joint ventures or partnerships can work, but they’re hard to get right. I’d rather improve AMO than have 50% of something with someone else, and I suspect that’s true for most operators. To make it work, there needs to be a person who is dedicated to that project. People can’t do multiple jobs, so if someone works on the owned & operated and the joint venture, they’ll prioritize the O&O.

Another approach is to explore licensing, which can be a more hands-off approach for one party where they offer help and the brand, but the bulk of the work—and ownership—is on the licensee. This is how things were supposed to work with the Sports Illustrated license and Arena Group. Authentic Brands, which owns the license, saw some upside, but Arena Group had to do all the work. But this didn’t work in the end.

Approach joint ventures and partnerships with care. They can work, but they can also distract from greater upside.