Why is Vox Media shopping for Group 9?

Vox Media Ceo Jim Bankoff. | Rita Quinn/Getty Photographs for SXSW

The Vox Media-Group 9 deal — and all the opposite digital media offers — defined.

Two weeks, two offers. And now 4 digital media firms are turning into two. Prepare for extra of that.

That’s the takeaway from Monday’s information that Vox Media — my employer — is near buying Group 9, the writer behind shops like The Dodo and NowThis. That deal announcement, first reported within the Wall Avenue Journal after which confirmed by way of a companywide electronic mail shortly after, comes days after BuzzFeed completed up shopping for Advanced Networks, the writer geared toward dudes who like hip-hop and sneakers.

The BuzzFeed-Advanced deal got here as BuzzFeed went public, a transfer its CEO Jonah Peretti stated he wished to make as a result of it will assist him purchase extra media firms. The brand new deal reveals that you simply don’t must be public to purchase a media firm: Vox is non-public, and so is Group 9.

However the mechanics of the deal — we will speak about a few of these in a minute — are much less necessary than the massive image: Collectively, the women and men who run digital media firms have been speaking about combining with one another for a while. The optimistic model of that pitch: Combining equals extra attain, extra effectivity, extra awesomeness. The flip facet: If we don’t mix, we could not make it.

And now the mashups are taking place, a method or one other.

BuzzFeed, as an example, had already acquired HuffPost, the digital writer Peretti had co-founded earlier than launching his personal firm; he and Group 9 CEO Ben Lerer had beforehand talked about combining their two firms. Two years in the past, Vox Media purchased New York Journal, and has been periodically selecting up small media firms — final month, as an example, it picked up podcast studio Prison Productions. Vice Media CEO Nancy Dubuc, who purchased Refinery 29 in 2019, has additionally made it clear that she thinks her trade ought to consolidate. And Dotdash, the digital publishing arm owned by Barry Diller’s IAC, simply swallowed journal writer Meredith and its library of titles, together with a lot of what was once known as Time Inc.

Wishing doesn’t make it so: The Athletic, the subscription-supported web site centered on sports activities, has been searching for consumers for a while, however can’t discover one that may pay the worth it desires. Axios, the publication writer created by veterans from Politico, was in talks with German writer Axel Springer earlier than that deal fell by way of.

And Group 9 itself wished to accumulate different firms. Initially of this 12 months, it had created a blank-check SPAC firm — the identical mechanism BuzzFeed used to go public and purchase Advanced. Monday’s information appears to be an admission that Group 9 couldn’t discover a firm it wished to purchase, or that wished to be acquired. (Now Group 9’s possession stake in that SPAC will switch over to Vox Media, which may then do … one thing with it.)

The throughline for all these offers — actual and proposed — is scale: Get sufficiently big, the rationale goes, and it makes it simpler to promote advertisements, or subscriptions, or each. And at this level within the pitch you’re supposed to say the looming digital media duopoly of Google and Fb, and argue that consolidation is an antidote to that. However to be clear: It’s not as if all of those firms mixed could be precise rivals to both Google or Fb; it’s simply that having greater audiences makes it simpler to draw extra advert {dollars}, interval — or for subscription-based firms, greater firms have extra stuff to promote.

So if consolidation helps these publishers survive, then … good? Sure, consolidating publishers implies that some titles and types you want are more likely to get merged out of existence. However hopefully extra will survive this manner than they’d on their very own.

So far as the announcement particulars go: That is an all-stock deal, that means buyers in Group 9 — which embody Discovery, the cable programmer that’s making an attempt to accumulate Warner Media — will find yourself with a 25 % stake in Vox Media. Vox Media, in the meantime, has already taken funding cash from Comcast. So two of the largest media firms on the planet may find yourself with stakes in the identical digital media operation — although I’m unsure both of them cares a lot about that.

And whereas Vox Media CEO Jim Bankoff informed us in an organization electronic mail Monday that he has “no quick plans to go public,” that is very a lot the sort of deal you make as a precursor to going public: The Wall Avenue Journal stories that Vox Media, if this acquisition goes by way of, will do $700 million in income subsequent 12 months, with $100 million in revenue; BuzzFeed is projecting comparable numbers for itself.

Past sheer bulk, the eventual pitch to buyers could be the one the corporate desires to begin making to advertisers as quickly as potential: We’ve acquired stuff for everyone. I surveyed a few of Vox’s rivals on Monday and heard greater than a little bit of shit-talking in regards to the belongings the corporate is about to accumulate: “You’re shopping for a pet web site,” sniffed one government. But when folks need to purchase advertisements on that pet web site, and that pet web site’s revenues assist hold me employed, I’m not going to complain.

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