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Vox-Group Nine deal confirms the reality of scaling to survive digital media

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Consolidation of digital media companies shows no signs of slowing down. Vox Media acquires Group Nine Media, the publisher of sites such as Thrillist, NowThis and Dodo, a deal that would combine the brands into one of the largest online publishers in the digital space. The deal, first reported by the the Wall Street newspaper and confirmed shortly thereafter in a company-wide note sent by the CEO of Vox Media Jim bankoff, is expected to close early next year pending regulatory approval; the combined company would generate more than $ 700 million in revenue and more than $ 100 million in profit, according to the Newspaper.

“The business rationale for this merger is to increase revenue, increase scale and combine these incredibly powerful and complementary portfolios,” Bankoff told staff in his memo. The all-equity nature of the agreement would leave Groupe Neuf investors a 25% share in Vox Media; because Group Nine investors include Comcast, and Vox Media investors include Discovery, Recode Pierre Kafka points out that “two of the largest media companies in the world could end up with stakes in the same digital media operation”. Bankoff to lead the combined company, with CEO of Group Nine Ben Lerer assume the role of administrator within its board of directors. The pair appeared on CNBC on Tuesday, with Lerer saying “the ladder is a path to optionality,” putting them in a position to acquire more and “take advantage of a market where it has been difficult to break into. to be small”.

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Vox has grown steadily over the years, buying New York Media (where I worked) and Epic in 2019 and, more recently, smaller properties such as the Punch cocktail website and Criminal Productions podcast studio. Group Nine, which itself was born out of a merger in 2016, had its own ambitions for expansion: it acquired PopSugar in 2019 and last year formed a SPAC – the route BuzzFeed took to go public and acquire Complex – to ostensibly pursue others. While Group Nine’s deal with Vox Media apparently does not involve PSPC, it will carry over into the merger, according to Kafka. Bankoff told staff he had “no plans to go public immediately,” although Kafka notes that “it’s really the kind of deal you make before you go public.”

Bankoff is therefore in a better position to bring Vox Media to the stock market, just like its counterpart. Jonas Peretti, the CEO of BuzzFeed, did so last week in a turbulent but nonetheless historic occasion for digital media. BuzzFeed’s public debut came as it finalized the acquisition of Complex Networks. Peretti, who has been talking about digital media company collaboration since 2018 and struck a deal for HuffPost earlier this year, presented the acquisition of Complex and the merger of PSPC as a way to “thrive in the age of media consolidation “. Bankoff seemed to share this point of view, telling employees on Monday that “together we will be an even stronger and more financially viable company, able to invest more in our products and our people” and “to be the clear leader of modern media. “. Vox Media “explored ways to raise funds for future growth, including the possibility of going public” and may be able to pursue further acquisitions – and a possible IPO – following this merger, the Newspaper reports. BuzzFeed’s own challenges since becoming a public company, however, may change Vox’s calculation.

Whether or not Vox Media becomes the next major player to do business as a public company, its acquisition of Group Nine is just the latest attestation of the need to grow in order to survive in an advertising market dominated by Google and Facebook. “It’s not as if all of these companies combined are real competitors of Google or Facebook,” Kafka writes. “It’s just that having a bigger audience helps attract more ad dollars, period, or for subscription businesses, bigger businesses have more to sell. “

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