Mergers and Acquisitions

M&A activity picking up as media companies get ready for recovery

Via Unsplash

M&A activity was understandably limited during the peak of the pandemic, but transactions worth $700 billion have been done so far this year. Media companies are starting to think about what comes next, doing deals to bring in the content, customers and build the capabilities they need to compete.

  • Media M&A activity was curbed significantly last year. Just 1,091 media transactions were recorded, a 19% drop on 2019, according to M&A advisory firm Ciesco.
  • But Ciesco sees a ‘bounce-back’ in 2021, with the media and marketing sectors fueling growth. Business transformation and ‘future-proofing’ will drive the agenda for businesses following the challenges of last year.
  • “2021 will be a period of re-invention for many companies. Technology and data will be at the forefront of this evolution, with smart use of data informing decisions across all parts of an organisation,” said Ciesco CEO, Chris Sahota.
Recent deals
  • Rupert Murdoch’s News Corp. is acquiring Investor’s Business Daily (IBD) for $275 million. IBD will come under the management of News Corp. subsidiary Dow Jones, publisher of The Wall Street Journal. IBD has posted double-digit revenue growth in recent years, almost exclusively from the firm’s investor tools and research and analysis products.
  • The deal brings News Corp. almost 100,000 digital subscribers, with little duplication on the Dow Jones subscriber base. “We will be able to cross-sell and up-sell with Dow Jones financial products and provide specialist insights,” said Robert Thomson, CEO of News Corp.
  • Martech company Hubspot is acquiring business and tech media startup The Hustle in a deal that is all about buying content that, according to Hubspot senior VP of marketing,  Kieran Flanagan, “entrepreneurs, startups and scaling companies are deeply passionate about.”
  • For a rumoured price-tag of $27 million, Hubspot gets 1.5 million newsletter subscribers and the popular ‘My First Million’ podcast. The Hustle gets the financial backing to expand to other platforms. “We’re also going to hire the best content creators in the world,” said The Hustle founder, Sam Parr.
Buying subscribers
  • In a surprising deal, the publisher of the Daily Mail bought leading science and technology weekly New Scientist for £70 million in cash. Readers, worried that the relationship with the popular tabloid would weaken the magazine’s impeccable scientific publishing credentials, were reassured that the deal guaranteed the magazine’s editorial independence.
  • New Scientist has a weekly circulation of 134,000 in print and digital; three-quarters are subscribers. “It is a natural step in our consumer strategy to improve the quality of our revenues through building up subscriptions and digital capabilities,” said Paul Zwillenberg, DMGT CEO.
  • News and business publisher Axios is reported to be in merger talks with The Athletic, a leading subscription-driven sports site. The Wall Street Journal reported the merger would create a corporate entity (SPAC) to raise funding money for expansion and future acquisitions.
  • The long-term plan may be to acquire publishers producing content that consumers pay for and that would support premium advertising. But initially, the Athletic has a very strong local sports reporting network that Axios could leverage into local news.

Media companies have consistently used M&A activity to remain competitive and future-proof their businesses. The hope is that by combining operations – bringing in technology, content or audiences – the new organisation will be bigger and better than the sum of its parts.

Although COVID-19 slowed acquisitions and mergers last year, it has since added a fresh impetus to modernise. According to an article published in Forbes at the end of 2020: “The media industry’s 6-year timetable for profound media industry change became a 6-month timetable, changing the deal equation among many others.”

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