Note: This was originally published as the daily newsletter at the Columbia Journalism Review, where I am the chief digital writer
On Tuesday, Vox Media and Group Nine announced that they have agreed to merge their operations, in what Jim Bankhoff—Vox’s co-founder and CEO—told Axios will create “the fastest-growing company of scale in media.” Vox controls a suite of websites, including the eponymous Vox, as well as The Verge, Eater, and SB Nation, while Group Nine owns a number of niche interest sites such as NowThis, The Dodo, PopSugar, and Thrillist. The merger comes on the heels of a number of media-related deals, including BuzzFeed’s merger with a special-purpose acquisition company (SPAC), which gave the company a public listing and a theoretical value of $1.5 billion, and Axel Springer’s acquisition of Politico, in a deal valued at $1 billion. Donald Trump has also hitched a ride on the SPAC train by merging his media venture with an entity in a deal valued at $2 billion.
The idea of achieving something called “scale” is often referred to when deals like the Vox-Group Nine merger are announced, but the definition of that term is surprisingly hard to pin down. For example, Group Nine acquired PopSugar less than two years ago for $300 million, and yet, according to some sources who spoke with the New York Post, the Vox merger deal values all of Group Nine at less than $300 million—a little over half what the entire company was valued at in 2016, when it got a $100 million investment from Discovery. The current deal reportedly values Vox at $672 million, substantially less than the $1 billion it was theoretically valued at in 2015, during its last funding round, despite the growth the company has reported in the years since that investment.
In a similar vein, BuzzFeed’s SPAC deal originally valued the company at about one and a half billion—less than what it was theoretically worth in 2016, when it got a two hundred million dollar investment from NBCUniversal. Since BuzzFeed merged with the SPAC—and subsequently acquired Complex Networks, a global content network targeting millennials, which itself had a theoretical market value of three hundred million dollars—the new entity’s market capitalization has plummeted by close to forty percent, to the point where it is worth less than eight hundred million dollaes, or less than half what it was supposedly worth when it got the NBCUniversal funding. BuzzFeed had seventy-two million unique visitors in May of this year, according to Comscore; even after the merger with Complex Networks, it will only be slightly larger than Vox (by that measure, at least).
Continue reading “Chasing the ever-changing goal of media scale”