Illustration: Sarah Grillo/Axios

Special purpose acquisition companies, or SPACs, are booming, and media companies are looking to be a part of the action.

Why it matters: SPACs have become a popular alternative for businesses seeking to go public without undertaking a traditional IPO process.

What they're saying: "With a traditional IPO, it's a longer process to register initially with the SEC. But when you're merging with an already public company, it's a streamlined process," says John Hendricks, the Discovery Communications founder and chairman who launched CuriosityStream in 2015. 

CuriosityStream has agreed to merge with Software Acquisition Group, a SPAC led by former Ooyala CEO Jonathan Huberman. 

  • Since SPACs are shell companies whose sole purpose is to acquire an existing business to take it public, they act as a conduit for companies to make it to the stock market via a process that's much more akin to an acquisition or merger.
  • "There's more certainty around the pricing as well," he notes, also adding that "there's a better ability to get future guidance (about performance) by going the SPAC route and we thought that would be important for investors to get the bigger picture of what we think our growth will look like in the next five years."
  • The merger will inject about $180 million of cash into CuriosityStream, including $25 million recently secured via a private investment in public equity (PIPE) in part from existing investors.
  • As part of the proposed merger deal terms, existing CuriosityStream shareholders will retain nearly 63% ownership in the combined business.

Between the lines: "We will be the only pure streaming company other than Netflix," Hendricks said when asked about other smaller streaming companies that have sold to large telecoms or entertainment giants before the SPAC boom. 

  • "We think this a great place to be in the public marketplace. Most media companies in streaming, burdened by all legacy businesses and distort contracts with cable operators, prohibits them from fully exploiting streaming opp."

The big picture: CuriosityStream is not alone.

  • Playboy Industries recently announced it would also go public by merging with a SPAC, and as have gaming and betting companies like Rush Street Interactive, Skillz, and Golden Nugget Online Gaming.
  • Dish Network co-founder and chairman Charlie Ergen recently assembled his own SPAC, CONX Corp., which is seeking to acquire a business in the technology, media and telecommunications industry, including wireless communications.
  • In the gaming world, Mark Pincus, founder and ex-CEO of Zynga, also recently jumped into the SPAC game, while ex-Glu Mobile CEO Niccolo de Masi is already onto his second one.

Go deeper: What the 2020 SPAC boom means for 2021

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