{"id":33090,"date":"2021-12-15T15:41:00","date_gmt":"2021-12-15T15:41:00","guid":{"rendered":"https:\/\/mathewingram.blog\/?p=33090"},"modified":"2021-12-15T15:41:00","modified_gmt":"2021-12-15T15:41:00","slug":"chasing-the-ever-changing-goal-of-media-scale","status":"publish","type":"post","link":"https:\/\/mathewingram.com\/work\/2021\/12\/15\/chasing-the-ever-changing-goal-of-media-scale\/","title":{"rendered":"Chasing the ever-changing goal of media scale"},"content":{"rendered":"\n

Note<\/strong>: This was originally published as<\/a> the daily newsletter at the Columbia Journalism Review, where I am the chief digital writer<\/em><\/p>\n\n\n\n

On Tuesday, Vox Media and Group Nine announced <\/a>that they have agreed to merge their operations, in what Jim Bankhoff\u2014Vox\u2019s co-founder and CEO\u2014told Axios will create <\/a>\u201cthe fastest-growing company of scale in media.\u201d 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\u2019s merger with a special-purpose acquisition company<\/a> (SPAC), which gave the company a public listing and a theoretical value of $1.5 billion, and Axel Springer\u2019s acquisition of Politico, in a deal valued at $1 billion<\/a>. 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<\/a>.<\/p>\n\n\n\n

The idea of achieving something called \u201cscale\u201d 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<\/a> 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>\u2014a little over half what the entire company was valued at in 2016, when it got a $100 million investment from Discovery<\/a>. The current deal reportedly values Vox at $672 million, substantially less than the $1 billion it was theoretically valued at<\/a> in 2015, during its last funding round, despite the growth the company has reported in the years since that investment.<\/p>\n\n\n\n

In a similar vein, BuzzFeed\u2019s SPAC deal originally valued the company at about one and a half billion<\/a>\u2014less than what it was theoretically worth in 2016<\/a>, when it got a two hundred million dollar investment from NBCUniversal. Since BuzzFeed merged with the SPAC\u2014and subsequently acquired Complex Networks, a global content network targeting millennials, which itself had a theoretical market value of three hundred million dollars<\/a>\u2014the new entity\u2019s market capitalization has plummeted by close to forty percent, to the point where it is worth less than eight hundred million<\/a> 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<\/a> (by that measure, at least).<\/p>\n\n\n\n\n\n\n\n

What all this suggests is that the definition of sufficient scale is a constantly shifting target<\/a>\u2014especially if the companies merging or being acquired are shrinking in valuation at the same time, as virtually everything<\/a> in the mainstream media industry has been doing for a number of years, with the exception of a few standouts. (As the Red Queen said in Alice in Wonderland<\/em><\/a>, \u201cIt takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast!\u201d Brian Morrissey, the co-founder and former editor of Digiday<\/em>, wrote that \u201c\u2018scale matters\u2019 is still the message,<\/a>\u201d but many legacy digital publishers are still trying to catch up to giants like Google, Facebook, and Amazon on the monetization front<\/a>. \u201cCiting Comscore [traffic numbers] is a red flag that you\u2019re fighting the last war, not the next one or even the current one,\u201d he added<\/a>.<\/p>\n\n\n\n

In some of these cases, the justification of merging for \u201cscale\u201d may be just one goal among several. At BuzzFeed, for example, the company\u2019s investors had reportedly been pushing it to come up with an exit strategy<\/a> for some time\u2014a way for NBCUniversal and others to get out some of the money they put in. The merger with a SPAC was seen by some as a desperation move<\/a> to allow the company to go public at any cost;the aftermath of the deal suggests that at least some investors are not encouraged<\/a> that BuzzFeed will achieve some kind of \u201cscale\u201d that will enable it to prosper. In the days leading up to the finalization of the merger, the funders behind the SPAC pulled almost all of their money out of the vehicle<\/a>, leaving BuzzFeed with much less than it had hoped for when it originally announced the deal.<\/p>\n\n\n\n

At Recode<\/em>, which is part of Vox Media, Peter Kafka boiled down the pitch that Vox and Group Nine and BuzzFeed and others are making. <\/a> \u201cThe optimistic version of that pitch: Combining equals more reach, more efficiency, more awesomeness<\/em>,\u201d Kafka wrote. \u201cThe flip side: If we don\u2019t combine, we may not make it<\/em>.\u201d Left unspoken, of course, is the possibility that even if they do <\/em>combine, they still might not make it.<\/p>\n\n\n\n

Here\u2019s more on media deal-making:<\/p>\n\n\n\n