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Billion dollar valuations and ambitious projections shaped M&A in 2021. But will the hype last?

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For an industry frequently cited as struggling, the sale figures of some of this year’s headline media acquisitions have painted quite a different picture. But some of the acquired companies have a grim fate in store. Esther Kezia Thorpe takes a look at the key M&A trends of the year as part of our Media Moments 2021 report.

As predicted, 2021 was a rollercoaster of post-pandemic mergers and acquisitions. Media organisations took the opportunity to snap up rival brands as the dust settled, while others attempted to make themselves look more attractive to potential buyers…with somewhat mixed results. 

The deals

The year kicked off with the completion of BuzzFeed’s acquisition of HuffPost from Verizon Media. The acquisition had been announced in November 2020, and finalised in February 2021. Just weeks after signing on the dotted line, BuzzFeed CEO Jonah Peretti cut almost 50 jobs in the US newsroom, shut the Canadian version of HuffPost, and culled over half of its UK news team. Peretti said the rapid restructuring was necessary “in order to break even this year and fast-track the path to profitability.”

Not content with snapping up HuffPost, BuzzFeed just months later announced that it had agreed to acquire Complex Networks for $300 million. The American media and entertainment brand was co-founded by Rich Antoniello and Marc Ecko in 2002 and houses brands including First We Feast covering food entertainment, Sole Collector covering sneaker news, Pigeons and Planes covering music, and the ComplexCon festival.

Together, BuzzFeed and Complex are expected to generate $521 million in revenue this year, with pretax profit of around $57 million. The SPAC values BuzzFeed at around $1.5 billion – some 3 times estimated 2021 revenue – and this was expected to go up once the company starts publicly trading.

The valuation and BuzzFeed’s revenue forecasts have certainly raised a few eyebrows in the media world. The publisher has benefitted from the post-pandemic advertising boom, seeing year-on-year growth of 39%. ECommerce revenues have also grown, and BuzzFeed has said it intends to make further acquisitions to build scale and revenue further. However, its public debut on December 6th did not go smoothly after the company was hit by a flurry of investor withdrawals.

On the topic of slightly insane valuations, in August, German publishing giant Axel Springer acquired Politico in a deal that valued the US political news site at over $1 billion. Axel Springer launched Politico Europe as a joint venture and as part of the deal, has bought the remaining 50%. The acquisition is expected to close by the end of this year.

One that took many by surprise in August was Future PLC’s announcement that it was acquiring UK-based Dennis Publishing in a £300m deal. A few titles such as Cyclist, Viz and the newly spun-out motoring portfolio Autovia would remain with private equity firm Exponent. But the rest, from flagship news brand The Week to niche tech titles IT Pro and PC Pro, will be added to Future’s 200+ brands.

As well as making it the second biggest consumer magazine publisher in the UK, the move will strengthen Future’s position in the States. Dennis has had a recent push there, with 56% of its revenues coming from the US. Future’s eCommerce and affiliate success have been well documented, and its newly-acquired Dennis brands will fit nicely in its current portfolio. But Future will also benefit from Dennis’ strong subscriptions performance, especially from titles like The Week Junior which continually sees growth.

Future’s acquisitions have been incredibly bullish over the past few years. Aside from Dennis, it also acquired Marie Claire US, money comparison site Mozo and GoCompare owner GoCo this year. This is despite having only finalised the acquisition of TI Media in 2020. It also doesn’t plan to close any brands, and apart from overlaps in other business functions, isn’t intending to make cost-savings on the editorial side.  

Although the company has its hands full with settling in its new acquisitions, CEO Zillah Byng-Thorne doesn’t rule out further purchases. “Certainly over the next 12-18 months I would be surprised if you didn’t see more M&A as we continue to execute on our strategy,” she said

In contrast to Future’s intent to nurture its new brands, Alden Global Capital has been busy in the US. In February, it announced it was acquiring Tribune Publishing, owner of The Chicago Tribune and New York Daily News, for $630 million in an all-cash deal. The acquisition raised fears of cost-cutting, as Alden has a ‘history of deep cost-cutting at its other newspaper properties’. One estimate suggests that more than 10% of the Chicago Tribune’s staff was cut within six weeks of Alden’s purchase of the paper, while other Tribune newsrooms have lost upwards of 20% of staff.

“They call Alden a vulture hedge fund, and I think that’s honestly a misnomer,” former Metro reporter Charlie Johnson said, commenting on what was left of the Chicago Tribune in October. “A vulture doesn’t hold a wounded animal’s head underwater. This is predatory.”

Just weeks before the end of the year, Alden offered to buy Lee Enterprises, currently the fourth largest newspaper group in the US, for $141 million. Alden was hoping to push the sale through before the new year, but Lee’s board approved a ‘poison pill’ shareholder rights plan at the end of November that would prevent Alden from acquiring more than 10% of the company for the next year, while the company considers its next move.

We don’t have room to go into this year’s other M&A deals in detail, but in brief:

  • Group Nine went public via a SPAC at the start of the year, and is actively looking for digital businesses to buy and merge with. Vice Media was in talks with them just last month, but is now in advanced talks with another SPAC about going public.
  • IAC’s Dotdash proposed a takeover of Meredith in a deal which values the publisher at $2.7 billion. The all-cash transaction is expected to close by the end of 2021, and would see the two companies combining to be called Dotdash Meredith.
  • Vox Media made a series of acquisitions including Cafe Studios to bolster its podcast network, Hot Pod as its first paid newsletter product. and Punch, an award-winning spirits and cocktail publisher.
  • CRM software company Hubspot signed an agreement to acquire daily business newsletter The Hustle. The deal was valued at around $27 million, and will help Hubspot educate its existing and potential customers about business trends.

The no deals

Politico wasn’t the only publication in Axel Springer’s sights this year. In May, it was reported that they were in talks to merge with Axios, but the talks came to an end without a deal over the summer. According to New York Times writer Ben Smith who published a report into sexual harassment charges at Springer-owned Bild, ‘sneaky dealings’ over potential new leadership appointments caused Axios to pull out of the merger.

Axios has also been in merger talks this year with sports start-up The Athletic. The latter has spent much of the year trying to find a buyer; after talks with Axios ended, it approached the New York Times. But it has been unable to agree a price with either publisher, despite its million-strong subscriber base. Millennial women’s publisher TheSkimm also has yet to find a buyer, despite hiring a banking company in May to help it. 

It’s inevitable that we’ll see more mega mergers and smart acquisitions in 2022. Whether that’s a good or bad thing depends on whether it’s an Alden or an Axel Springer eyeing you up.

This article is an extract from our annual report, Media Moments 2021. For more on this chapter including case studies and key statistics, download it now for free.