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BFD Expert Voices - Media Deals

BFD Expert Voices

Niche media companies have begun receiving direct investment from or been bought out by other brands as a platform for customer acquisition and marketing.

Why it matters: The alternative to venture capital funding for media startups doesn't necessarily hold them to aggressive growth goals VCs demand, but long-term commitment may lag.

State of play: These acquisitions or investments extend across topics from cars to business to sports. 

Galpin Motors, a Los Angeles-based car dealer, backed The Autopian, a new automotive news outlet launched by a pair of ex-G/O Media staffers. 

HubSpot, a sales and marketing software company, acquired The Hustle, a media brand that includes a daily newsletter about entrepreneurship and business news, in February 2021. 

Penn National, a casino operator, invested in Barstool Sports with $163 million for a 36% equity stake in January 2020. It plans to acquire the rest of Barstool in early 2023, according to Penn's latest earnings call.

Yes, and: Rather than go external, other brands have created their own media arms. 

Casper, the mattress startup, created Van Winkle in 2015 as a publication focused on sleep. It then created a print magazine called Woolly in 2017. 

Dollar Shave Club, the grooming startup, launched MEL as a men's lifestyle magazine in 2015. 

American Express relaunched its luxury lifestyle magazine Departures last year. 

Yes, but: It's unclear how long the investments will last. 

Casper shut down Van Winkle in 2017, and the Woolly brand is no longer active, but Casper maintains a blog named The Casper Blog. 

Unilever, which acquired Dollar Shave Club in 2016, stopped backing MEL last March. Recurrent Ventures, a venture-equity-backed digital media company, acquired MEL in July 2021.

1 big thing: Media startups under brands

Illustration of a rolled up newspaper with rolled up cash inside. 

Digital media company Hypebeast announced today that it will list on the Nasdaq through a SPAC merger with Iron Spark I in the third quarter. 

Why it matters: The SPAC market has been quiet after a flurry of attention that saw digital media companies pause their SPAC plans amid market volatility and a messy public market debut from BuzzFeed. 

Catch up quick: Kevin Ma founded Hypebeast in 2005 as a sneaker blog. It has since grown into a digital media and e-commerce company covering fashion, culture and lifestyle. 

Details: Hypebeast has been listed on the Hong Kong Stock Exchange since 2016, so it'll now be dual listed. Its Nasdaq ticker is HYPE. 

The deal includes $13.3 million in PIPE financing from quarterback Tom Brady, tennis star Naomi Osaka, Thirty Five Ventures co-founders Kevin Durant and Rich Kleiman, skateboarder Tony Hawk, Airbnb co-founder Joe Gebbia, actor Jonah Hill, artist Adam Levine, Electric Feel Ventures, South Korean record label TheBlackLabel and investment firm Irongrey. 

Ma will remain as Hypebeast's CEO and Patrick Wong will stay CFO. Iron Spark CEO Joshua L. Spear and former Nike president Trevor Edwards are expected to join the board.

By the numbers: The SPAC merger will result in an equity value of $534 million and an enterprise value of $353 million. 

It is estimated to provide up to $180 million in total proceeds.

Hypebeast is profitable. The company said its annual revenue for the fiscal year ending in March was at least $112 million, up 29% from the year prior. 

Hypebeast claims to have 26 million social media followers and 18 million monthly unique visitors to its digital platforms.

What they're saying: "With its track record of organic growth and public company discipline, Hypebeast is a perfect example of a company that is 'hidden in plain sight' both for its cultural significance and compelling business profile," said Amy Butte, chairperson of Iron Spark. 

2. The BFD: Hypebeast to list on Nasdaq

Illustration of a pair of sneakers with a dollar sign insignia 

The top 20 global M&A deals announced so far in 2022 include nine within the media, entertainment and technology sectors, per Refinitiv. 

Details: The largest deal of the year is Microsoft's acquisition of Activision Blizzard for $68.7 billion. 

The next top tech deal of the year was Zendesk's acquisition offer for more than $16 billion from a private equity consortium. Zendesk rejected it. 

Citrix Systems agreed to a $16.5 billion all-cash offer from Vista Equity Partners and Evergreen Coast Capital, an affiliate of Elliott Investment Management, in January. 

The fourth biggest deal announced was Nielsen Holdings for more than $15 billion from a private equity consortium, which the company at first rejected. It agreed to the takeover a week later. 

Context: Global M&A volume was $63.5 billion for the media and entertainment sector and $39.7 billion in telecom, according to Refinitiv. That deal value was a 10% and 4% drop, respectively, from the year prior. 

3. Charted: Q1's biggest TMT deals 

Mobile Premier League, an Indian mobile gaming company, is in talks to raise funding from FTX, per TechCrunch. http://axios.link/WmUB

Microsoft (Nasdaq: MSFT) bought Minit, a European process mining tech vendor that had raised about $12m from firms like Target Global, Salesforce Ventures, Earlybird VC and OTB Ventures. http://axios.link/X1Vp

The Arena Group (NYSE: AREN) completed its acquisition of national media company AMG/Parade. http://axios.link/f0qM

Haivision Systems (TSX: HAI) completed its acquisition of Aviwest, a France-based provider of IP-based mobile video contribution systems. http://axios.link/vJDa

KKR is telling Telecom Italia (Milan: TIT) that it will abandon its €10.8b takeover proposal if the telecom giant doesn't provide the PE firm with due diligence assistance. http://axios.link/ZzBq

4. Deal flow

Vimeo appointed Gillian Munson as CFO. She most recently served as CFO of Iora Health and partner at Union Square Ventures. http://axios.link/9enH

DirecTV named Amy Leifer as chief advertising sales officer. She previously held leadership roles at Xandr and WarnerMedia. http://axios.link/DTJZ

WME hired back April King from ICM for its talent department. http://axios.link/4FQt

Mixhalo, a San Francisco-based audio tech company for live events, hired Allison Brecklin as VP of client operations and Kristene Turner as VP of marketing. http://axios.link/cKjv

Sony Music Entertainment hired Serita Wesley as head of U.S. entertainment podcast. She previously worked for Fresh Produce Media and Westbrook. http://axios.link/IC2v

Banijay UK is replacing CEO Lucinda Hicks with incoming executive chairman Patrick Holland. He was the former director of factual, arts and classical music at the BBC. http://axios.link/9isD

5. Movin' on up (or out)

Candle Media's Kevin Mayer says he'll continue to work with Will Smith, teases Reese Witherspoon children's IP (Variety)

"It's a great company. They have great projects. They're very multi-faceted. They have a film and TV production. They have social media stories like Red Table Talk ... We have a 10% stake. That's where we are for now," Mayer said at the MipTV conference in Cannes. 

Michael Grade confirmed as Ofcom chair despite MPs' warning (The Guardian) 

"His clear lack of depth when talking about social media and online safety gives us concerns," said the digital, culture, media and sport committee in a report published just hours before the government confirmed Grade's appointment. 

Netflix tells employees to be more careful about spending, hiring (The Information)

"The comments, made at an employee town hall on Monday as well as during a management offsite held last month in Anaheim, Calif., come as the streaming giant grapples with sharply slowing subscriber growth," Jessica Toonkel reports. 

6. Channel surfing

Illustration of a remote control in the shape of a surfboard leaning against a VW bus.

Happy Jon Batiste and Silk Sonic won SO MANY Grammys day!

💰 Situational awareness: Elon Musk has bought a 9.2% stake in Twitter, according to a regulatory filing. Shares jumped 22% in early trading on the news. Go deeper. 

@kerrymflynn: "The Maine" at Webster Hall. Seeing one of my favorite bands tonight. They're kinda emo but I'll classify them as pop-punk. 

Thank you for reading Axios Pro Media Deals! Please ask your friends, colleagues and sneakerheads to sign up.

April 04, 2022

1 big thing: Media startups under brands