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Illustration: Sarah Grillo/Axios

A slew of digital media acquisitions over the past few weeks shows how unreliable private valuations can be.

Why it matters: The only way for anyone to really know how much any private company is worth is if it sells in an all-cash deal. When privately-held companies sell via all-stock transactions or via a mix of cash and stock, dealmakers can essentially make up the value of the assets they are looking to purchase.

Expand chart
Data: Axios Research via media and public reports; Table: Axios Visuals

Driving the news: Group Nine Media said Monday that it has reached a definitive agreement to acquire POPSUGAR Inc., a lifestyle digital media company that caters to millennial women, in an all-stock transaction.

  • The acquisition values POPSUGAR at $300 million and the combined company at $1 billion, per the Wall Street Journal.
  • The Journal had previously reported that Group Nine's latest valuation before the acquisition was north of $600 million.
  • Even if we assume that these figures are correct, we don't know what lies behind them.

The big picture: The Group Nine/POPSUGAR deal was the third major media deal that happened in the last month, signaling that consolidation is afoot.

Between the lines: Digital media execs and investors have privately told Axios that the combined valuation of Vice Media and Refinery29 should be much lower than the total $4 billion figure that has been reported.

  • Vice investor Disney has already written written down its entire $400 million investment in the company, signaling that it doesn't expect to see any return for its money.

Be smart: Private company valuations are set by a small number of investors, not markets. There's no guarantee an acquirer will agree with those figures, and "headline" valuations might mask all sort of structural mechanisms that protect investors at the expense of stock-holding employees.

Bottom line: Media companies are merging in an effort to combine resources and reach bigger audiences in a bid to become profitable, or at least get a better shot at competing with the likes of Google and Facebook for ad revenue. But until companies go public or sell for a public cash figure, there's no way of knowing just how much their big bets are really worth.

Worth a read: Via CNBC's Alex Sherman: "Vice’s $400 million deal for Refinery29 illustrates the pointlessness of private valuations."

Go deeper

Ben Geman, author of Generate
48 mins ago - Energy & Environment

What to watch as infrastructure talks heat up

Illustration: Annelise Capossela/Axios

A mix of Beltway action and extreme weather events have brought the fault lines in infrastructure talks and their planetary stakes into sharper focus.

Catch up fast: Senate Democratic leaders pledged to seek big climate measures in a multitrillion-dollar, Democrats-only package that faces a very narrow political path.

Drought, record heat wave in West have hallmarks of climate change

People on Folsom Lake in Granite Bay, California, U.S., June 16, 2021. Photo: David Paul Morris/Bloomberg via Getty Images

The prolonged and widespread heat wave in the West, along with the region's increasingly severe drought, is a sign of how climate change has already tilted the odds in favor of such extremes, studies show.

Why it matters: The rapidly growing Southwest, in particular, is also the nation's fastest-warming region. The combination of heat and drought could lead to a repeat, or even eclipse, the severity of 2020's wildfire season in California and other states.

Kendall Baker, author of Sports
2 hours ago - Sports

The sports stock market

Note: Michael Jordan's card is for baseball; Data: Alt; Table: Andrew Witherspoon/Axios

Shohei Ohtani's trading card value has risen 781% since the start of 2021, the highest year-to-date return of any athlete on Alt, a sports card exchange that aims to bring more liquidity to alternative assets.

Why it matters: The trading card market is the closest thing we have to a stock market for sports.