Oct 6, 2021 - Economy

IAC's Dotdash to acquire Meredith's National Media Group for $2.7 billion

Total average unique website visitors
Data: SimilarWeb; Chart: Kavya Beheraj/Axios

IAC, the internet holding company led by media mogul Barry Diller, has agreed to acquire Meredith Corp.'s National Media Group for $2.7 billion, the companies said Thursday.

Why it matters: The deal creates one of the largest food, home and lifestyle media companies in the world.

  • Meredith owns roughly two dozen brands, with titles like Better Homes and Gardens and All Recipes.
  • Dotdash owns 14 brands, including Simply Recipes and The Spruce.

Details: The combined company will reach roughly 175 million unique visitors per month, per data from Dotdash. The company says that 95% of that audience is women.

  • Pricing: IAC is buying Meredith's National Media Group, which is the part of the company that owns roughly two dozen lifestyle magazine brands for $42.18 per share.
  • Financing: The deal will be financed with IAC cash and $1.6 billion of debt at Dotdash Meredith. In a statement, IAC said it has received a commitment for an $850 million bridge facility and that long-term financing at Dotdash is "expected to be obtained prior to closing."
  • Leadership: The combined company will be led by Dotdash CEO Neil Vogel, who has been with IAC for nearly nine years.

Be smart: While the companies' brands are complementary, their revenue models are different. Meredith's makes most of its revenue from things like subscriptions and licensing partnerships. Dotdash makes most of its revenue from ads and e-commerce.

  • "Meredith's brands by and large are incredibly complementary to our brands," Vogel said on an investor call following the announcement of the transaction. He noted that both of their companies focus on content that "helps people get inspired and helps them answer questions."
  • Because both companies are focused on evergreen content, they are both more digitally dependent on search distribution and brand familiarity than social media distribution. This is important, given that the depreciation of third-party cookies is making it harder for companies reliant on social media ads.

Catch up quick: Dotdash was created in 2017 after IAC bought and rebranded About.com from the New York Times four years prior.

  • It has since invested tens of millions of dollars in revamping About.com's content and creating small, niche brands with evergreen, "how-to" content. It's also acquired several new websites, like Simply Recipes, Serious Eats, Liquor.com, Treehugger, Byrdie, Brides and MyDomaine.
  • Today, Dotdash is one of the most profitable digital media holding companies, valued around $2 billion, and it's IAC's fastest-growing business.
  • Meredith used to be a magazine and local TV business. Earlier this year, it announced a deal to sell its local media group for $2.7 billion in cash to Gray Television.

The big picture: The deal aligns broadly with IAC's corporate strategy of building brands up and spitting them back out on the public market once they mature. It recently spun out Vimeo in 2020 and Match Group in 2019.

What's next: The deal is expected to close by year's end.

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