Vox Media is set to merge with Group Nine, the parent company of NowThis, PopSugar, and Thrillist brands. Vox Media and Group Nine Media will combine to form “the fastest-growing company of scale in media.”
The merger will create a digital media powerhouse. Before the merger, both companies acquired major digital brands to enhance their scale. This deal will officially take Group Nine out of the start-up mode.
Jim Bankoff, who founded Vox Media, will be the CEO and chairman of the new combined company. CEO Ben Lerer, who built Group Nine Media from a newsletter to a leading digital publisher, will join the Board of Directors and advise on key strategic initiatives
The stock deal will grant Vox 75% of the company’s ownership, while Group Nine will retain 25%. The deal is on pace to close in early 2022, subject to regulatory approvals.
As quoted by Axios, Lerer said,
“I think that doing a stock deal like this signifies that we can be the acquirer of choice. My willingness and our willingness to do a stock deal speaks to a belief that there is real value in this stock.”
In a memo to the staff, CEO Jim Bankoff said,
The business rationale behind this merger is to grow revenue, increase scale, and combine these incredibly powerful and complementary portfolios.
– Together we will be an even stronger, more financially sustainable company that can invest more in our products and our people.
– Our combined company will be the clear leader in modern media, reaching audiences at scale everywhere, from podcasts to streaming services, from YouTube to TikTok, from websites to print.
– Group Nine Media does not have any paywalls and their revenue is largely driven by advertising, a studio operation, affiliate commerce, and licensing agreements.
– A team from both companies will start outlining a considerate plan to integrate functions where it is required. Also, none of the existing editorial offerings or services will change due to the acquisition.
As reported by Axios, the companies are expected to bring in combined revenues north of $700 million in 2022. Earlier this year, it was reported Group Nine was expected to make at least $200 million in revenue this year.
Group Nine Media announced last year that it was forming a SPAC that could take another company public.
In his note, Bankoff said,
[W]e have no immediate plans to go public, although we’ll always continue to evaluate opportunities that are in the best interest of all of our stakeholders, including our employees.
The company’s official deal announcement states that the deal is not within the Group Nine SPAC (Group Nine Acquisition Corp.), “which is a completely separate entity”.
The transaction comes during a period of intense consolidation within the digital media sector as digital giants battle it out with internet giants like Google and Facebook.
Some of the recent deals include Dotdash acquiring Meredith Corp, BuzzFeed acquiring Complex, and Axel Springer purchasing Politico.
With third-party cookies deprecated, digital publishers have been rushing to consolidate to reach larger audiences. This will allow them to compete better for advertising budgets against social media platforms and increase the size of their first-party databases.
The combined company will include:
As Bankoff said in a statement to Axios,
Scale matters. Scale for scale’s sake is not what’s important but quality combined with scale, which is what this story is about, is going to be an advantage in the marketplace.
