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Betches Media's sale to LBG Media combines digital media brands with similar backgrounds and goals but different demographics, chief revenue officer David Spiegel tells Kerry at Advertising Week New York yesterday. 

Driving the news: The deal puts a U.S.-based private company that never raised venture capital funding under the control of a larger, U.K.-based publicly traded firm that has the funds to grow the combined business.

Details: LBG operates LADbible, which, similar to Betches, was founded by friends in college. It also acquired UNILAD in 2018. The company joined the London Stock Exchange in December 2021.

LBG agreed to pay $24 million with a potential of $30 million more based on Betches reaching revenue and profitability targets to 2026, according to a filing with the London Stock Exchange. 

All of Betches' 67 employees are staying. 

The three co-founders — CEO Aleen Kuperman, chief creative officer Samantha Sage and chief innovation officer Jordana Abraham — will report to LBG CEO and co-founder Solly Solomou.

By the numbers: Betches' 2022 revenue was $14.6 million (unaudited), up 44% compared to the prior year. Its adjusted EBITDA was $3.9 million, per the filing.

Betches' audience is about 86% women, per the filing. It has 13 million Instagram followers, 40 million podcast downloads and 4 billion video views, the co-founders wrote in a blog posted on Betches' site yesterday. 

The company's staff has more than doubled over the past two years, starting at 25 employees in 2021. 

Zoom in: Betches not raising capital forced it to be cost-focused, Spiegel said. He joined last year after working at PE-owned G/O Media and VC-backed Vox Media and BuzzFeed, among other digital media companies. 

"The thing that really strikes a chord with me is just the authenticity of the voice and the brand," Sue Dietrich, marketing director of drinkware brand Stanley, said of Betches yesterday.

What we're watching: LBG said in its filing it's interested in more acquisitions for "building capabilities and/or expanding geographic reach." 

according to a filing yesterday with the London Stock Exchange

Betches sells to LADbible owner LBG Media

1 big thing: Spilling the tea on Betches

Gibson Johns, Stanley's Sue Dietrich, Betches' David Spiegel and Kerry Flynn seated in white chairs

Journalist Gibson Johns, Stanley's Sue Dietrich, Betches' David Spiegel and Kerry Flynn. Photo: Arisara Srisethnil

Hipgnosis Songs Fund, Merck Mercuriadis' U.K.-based music royalties fund, is undergoing a strategic review that could lead to the famed manager's ouster, the company said this morning.

Why it's the BFD: Hipgnosis' financial turmoil is further proof that the music rights bubble may have burst, Tim writes.

What's next: Next Thursday, shareholders will decide whether to approve a continuation of the investment trust for another five years.

Details: Hipgnosis said the review's goal is to increase shareholder value, but it does not plan to sell the company, currently valued at £882 million.

"The strategic review does not envisage any offer for the company, recommended or otherwise, under the City Code on Takeovers and Mergers," the company said.

Additionally, the board said it tried to amend its investment advisory agreement with Mercuriadis — he manages the fund, which is overseen by an independent board — including serving a notice of termination. But the board does not have a new investment advisor approved to take his place. 

Mercuriadis has a clause in his agreement that allows him to buy Hipgnosis' entire portfolio of music rights if his contract is terminated; the board said he rejected their proposal to remove that clause. 

Hipgnosis is also looking for a new chair ahead of the retirement of Andrew Sutch.

The big picture: Mercuriadis launched Hipgnosis in 2018 and spent billions in the ensuing years on buying rights to catalogs from Barry Manilow, Blondie, the Red Hot Chili Peppers and Neil Young.

Hipgnosis wasn't the only one, as firms including Blackstone and KKR poured money into the belief that song rights were a stable asset class. 

Not only have catalog deals dried up this year, but the returns on investment for those pricey song rights aren't as high as expected — earlier his week, Hipgnosis scrapped its dividend after telling investors it would now get only half the amount of royalty payments it was expecting.

Investors have criticized a proposed deal to sell roughly a fifth of its catalog to Blackstone-backed sister fund Hipgnosis Songs Capital — also run by Mercuriadis — at a discount for £363 million.

Hipgnosis Songs Fund launches strategic review

2. The BFD: 🎶 Record scratch

Mercuriadis at SXSW in 2019. Photo: Matt Winkelmeyer/Getty Images for SXSW

Data: Disney earnings report; Chart: Tory Lysik/Axios Visuals

ESPN drives more annual profit for Disney than the entirety of Disney's entertainment business, according to a new regulatory filing.

Why it matters: Disney is looking for a strategic partner to help ESPN manage its transition into the streaming era. The network's high profit margins may help explain why Disney isn't looking to sell the asset completely, Sara Fischer writes.

By the numbers: ESPN delivered more than $16 billion for Disney's fiscal year 2022 (which ended on Oct. 1, 2022) and $2.9 billion in profit. The vast majority of that income came from its domestic business.

By comparison, Disney's entertainment business, which includes its streaming services, linear TV networks and TV and movie studios, brought in $39.6 billion in revenue and $2.1 billion in profit during that same time period.

Yes, but: The data shows just how much ESPN's business relies on carriage fees from cable TV providers over advertising.

ESPN makes up most of the revenue within Disney's "Sports" segment. Within that segment, during Disney's fiscal year 2022, the majority of revenue came from affiliate fees that cable programmers pay to distribute ESPN ($10.79 billion) versus advertising ($4.4 billion) and subscriptions and other forms of income ($2.1 billion).

The big picture: The data also shows how much Disney's streaming efforts have eaten into the profit margins of its entertainment business.

Disney has told investors that it expects its streaming efforts to turn a profit by 2024.

The company said last month it nearly doubled its investments in its theme parks and cruise lines. Disney's experiences division earned $28 billion in revenue for the fiscal year 2022 and $7.2 billion in profit.

3. Charted: Disney opens ESPN's books

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• Forge, a San Francisco-based video game platform, raised $11m in seed funding led by Makers Fund, BITKRAFT Ventures and Animoca Brands. https://axios.link/45GiPwW

• Poppins, a French video game developer for children with neurodevelopmental disorders, raised €8m. Eurazeo led, and was joined by Verve Ventures, Allianz France and HEC Ventures. https://axios.link/3S4v5V2

• Mediatool, a Stockholm-based campaign management platform for advertisers, raised €7m in Series A funding. Fairpoint Capital and eEquity co-led and were joined by Newion, J12, Almi Invest and Twig Ventures. https://axios.link/46QxuGS

• 🎾 SwingVision, a tennis-focused AI video processing company, raised $6m in Series A funding. Authentic Ventures led and was joined by tennis professionals Lindsay Davenport and Alison Riske-Amritraj. https://axios.link/46xuAqM

• KKR raised around $3b for its third growth equity fund focused on tech companies in North America, Europe and Israel. https://axios.link/45BWtwO

• Breakpoint Capital, a VC firm led by James Payne (former CEO of MoPub), is raising $10m for its debut fund, per an SEC filing. https://axios.link/470lwuB

4. Deal flow

• 🏈 Roger Goodell signed a new three-year contract to remain as NFL commissioner through 2027. https://axios.link/46yQoCB

• Joshua Lowcock, former global chief media officer at UM Worldwide, joined Quad as president of Quad Media. https://axios.link/3Q38W6N

• Elyse Seder was named EVP and head of nonfiction at Ridley Scott's Scott Free. Marjorie Chodorov was named head of physical production. https://axios.link/49064QL

• Matt Kalavsky was promoted to Disney's SVP and general sales manager of domestic theatrical distribution. https://axios.link/3s5LBt7

• Elita Fielder Adjei joined CBS Stations as VP of communications. https://axios.link/3S4vqqM

• New York Magazine promotions: Genevieve Smith was promoted to executive editor and Gazelle Emami to editorial director. https://axios.link/48ZGivT

5. Movin' on up (or out)

📈 Netflix shares pop on earnings beat, advertising momentum (Axios)

"Better-than-expected subscriber growth suggests the company's efforts to crack down on password-sharing and offer a cheaper ad-tier are working," Sara writes.

⚽ Premier League to test broadcaster appetite for football rights (FT)

"The previous auction, which was rolled over during the pandemic, raised about £5bn. Bids are expected from Sky, DAZN and TNT Sports, which is jointly owned by BT and Warner Bros Discovery," Daniel Thomas, Josh Noble and Leila Abboud report.

"The legal issues stem from Anthropic's series of AI models referred to as Claude, and is the latest move in the music industry's efforts to stave off what it perceives as a massive copyright threat from AI developers," Jem Aswad writes.

6. Channel surfing

Illustration of a TV color test screen in the shape of a wave.

The penultimate night of Advertising Week New York featured some high-energy after-hours events.

Snap hosted Phantom House — the name of its new Halloween-themed content series — at The McKittrick Hotel, inviting people to use its AR lenses and generative AI tech Dreams while sipping cocktails.

VideoAmp held a party at the Boom Boom Room, the 18th floor of The Standard Hotel, headlined by Ne-Yo, who was celebrating his 44th birthday.

💭 Kerry's thought bubble: Even in a difficult media market, some companies are willing to spend the cash in the hopes of bringing in more. Marketers love a good party.

🎉 1 fun thing: Snap and VideoAmp parties

(L) Mirror Snap's Phantom House party. (R) Ne-Yo performs at VideoAmp's party.

(L) Mirror at Snap's Phantom House party. (R) Ne-Yo performs at VideoAmp's party. Photos: Kerry Flynn/Axios

🎙️ Situational awareness: Axios launched a new weekly podcast called "1 big thing," hosted by Niala Boodhoo. Episodes drop on Thursdays. 

@tim_bays: "Killers of the Flower Moon." I know I'm seeing this Scorcese epic but the question is do I wait 45 days to sit through another extremely long movie. 

@kerrymflynn: Tompkins Square Halloween Dog Parade. So glad this annual event is un-canceled! 🐶

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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October 19, 2023

1 big thing: Spilling the tea on Betches