Dec 15, 2020 - Economy & Business

SPACs could fuel next round of digital media wars

Illustration of a collection of checks with the shadow of a hand with a pen looming over one of them

Illustration: Sarah Grillo/Axios

Digital media companies are looking to consolidate with the help of SPACs (special purpose acquisition companies), an increasingly popular alternative for businesses to raise money via a public offering, without undertaking a traditional IPO process.

Driving the news: Group Nine Media is considering using a blank-check company to acquire some of its competitors, The Wall Street Journal reports.

  • Bustle Digital Group CEO Bryan Goldberg told The Information in September: “We would be logical candidates for something like a SPAC.”
  • Buzzfeed CEO Jonah Peretti has said he is looking to roll up more sites under his empire aside from HuffPost. There's been reports that he may possibly look to do so via an SPAC.

Other media companies are using private investment to fuel new acquisitions.

  • Axel Springer, the German publishing giant that owns Insider Inc., told The Information last month it wants to use money from its new shareholder, private equity giant KKR, to expand its U.S. footprint via acquisitions.

The big picture: Amid the pandemic, most digital companies that aren't rooted in high-growth areas, like podcasts, newsletters and streaming, have taken a hit.

  • Many firms are now eyeing more consolidation as a means to expand into high-growth areas, or increase their scale.
  • The pandemic-driven push to consolidate via SPACs or private funding follows a wave of big, digital media mergers last year.

What's next: Buyers are eyeing several targets including Vice (which now includes Refinery29), Bustle Digital Group (which is already a roll-up of many different sites like Nylon, Zoe Report, Bustle and others), and The Skimm.

Go deeper: TV companies and streamers are also getting in on the SPAC action.

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