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What’s Driving the IPO Boom for Digital Publishers?

Niamh Carroll 22 September, 2021 

The ad tech IPO boom is already in full swing – and we’re seeing similar activity from publishers too. In order to scale their businesses, many digital publishers are looking at taking their companies public to fund mergers and acquisitions. 

Buzzfeed, one of the best known of the digital natives, is a case in point. In June of this year, the company announced that it would be acquiring youth culture entertainment media company Complex Networks. In the same month, Buzzfeed said it intends to go public via a special-purpose acquisition company (SPAC).

These two announcements were strongly linked. A public offering can be a way to fund M&A activity, says Ian Whittaker, founder at Liberty Sky Advisors. 

“Companies can do acquisitions by trying to get the cash off their own balance sheet, which can be somewhat limiting and can take a long time to actually get to where you want. They leverage up, but again there are plenty of issues with that too, like whether banks will issue the debt in the first place,” said Whittaker.  

“If you use the public market as a continuum in order to make acquisitions and keep getting bigger, then it can do great things for you. Some companies have been able to reap the benefits of the private market to grow their business,” he added. 

This seems to be the primary motivator for BuzzFeed. The publisher has already been on something of a spending spree, agreeing a deal last year to buy HuffPost from Verizon Media, alongside its acquisition on Complex. But BuzzFeed CEO Jonah Peretti believes going public will speed up the process.

“There will be more acquisitions,” said Peretti. “There are more exciting companies out there that we want to pursue.” Adam Rothstein, executive chairman of 890 Fifth Avenue said that the two companies were hoping to build “an M&A machine”.

An increasingly popular route

Other digital media companies have also been eyeing up IPOs, and will likely be watching Buzzfeed very closely to see how they perform after going public. Vice Media is another digital media company that has been frequently mentioned as likely to seek an IPO. 

Earlier this year it was reported that Vice was seeking a $3 billion valuation in a SPAC merger. However, it was later reported that the SPAC talks had fallen through, leaving it unclear whether the media outlet is still seeking an IPO in its near future. 

Online women’s magazine Bustle has also expressed its intention to pursue an IPO. In May, CEO Bryan Goldberg said that Bustle Digital Group was rebranding itself to BDG, repositioning itself as a holding group that houses lots of different media brands. 

While an IPO seems to be a popular strategy for digital media companies right now, Ian Whittaker says these companies need to be clear on why they are going public. 

“There are many reasons why a company might go public. Some private-equity owners may want an exit, or indeed founders might want to get some cash out of their business. A lot depends on the actual rationale for listing,” Whittaker said. 

“There’s nothing necessarily bad with founders wanting to extract money out, it does raise question marks over how much it benefits the business,” he added.

Oversight and transparency

While there are many digital media companies weighing up whether to make an entry to the public market, being publicly traded obviously has its downsides. And indeed despite the current IPO hype, one major player in European digital media recently delisted from the stock market. 

German publisher Axel Springer spent 35 years on the Frankfurt Stock Exchange, before delisting in April 2020. The process of delisting the company began in 2019, when a majority share in the company was bought by KKR. 

Since then, Axel Springer has focused on building out its US presence, expanding its Insider (formerly known as Business Insider) team, and acquiring Politico in August 2021.

A source from Axel Springer, who preferred to remain anonymous, told VideoWeek that delisting was the right decision for the current stage of growth the company is in. 

“This is an important period of time to lay the foundations of future success,” an Axel Springer spokesperson said. “For example; growing our revenues from digital subscriptions and advertising. Rather than a focus on short-term investor returns, we are focused on growth and our long-term returns.”

As well as the pressure from shareholder oversight, Ian Whittaker said the extra transparency that being publicly listed requires can be quite burdensome for companies. 

“When you’re public you do have to be transparent and make a certain amount of information available,” he said. “There can be quite a lot of time spent doing the documentation that it takes to be listed. And in markets like the US and the UK, you’ve got strict rules about what investors have to be told.”


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