• by September 27, 2019

Vox Media and New York Media didn’t reveal the financial terms of their planned merger announced this week, but The Wall Street Journal's account of the deal suggests that job cuts are likely.

Citing unnamed sources, the newspaper reported New York Media, which publishes New York magazine and websites such as Grub Street and Vulture, lost $15 million in 2018 and was valued at $105 million in the deal with Vox.

Without more information about either company, it's hard to assess how they determined those values in relation to their financial projections. It's also hard to know whether each company's revenue is rising. Sales growth can cover a lot of other sins.

The WSJ reported that Vox Media's value had dropped by about 25% since 2015, when a financing round valued the company at about $1 billion.

Back then, digital publishers like Vox Media, BuzzFeed and Vice Media were still scaling up, forming new business units and hiring legions of employees. The ensuing few years brought a retrenchment as digital publishers didn't keep pace with the ongoing expansion of the digital ad market.

In covering the Vox Media -New York Media merger, The New York Times reported that neither company plans to lay off editorial staffers. It's likely sales, marketing and administrative roles are the most vulnerable, but I wouldn't be surprised if the combined company shrinks its content producers through attrition and occasional purges.

I also wouldn't be surprised to see more merger activity as the U.S. digital ad market matures.

Researcher eMarketer forecasts that spending growth will slow to 7.5% by 2023 from 23% last year.

That slowdown means every ad-dependent platform, ranging from the smallest blog up to Google and Facebook, will be fighting for a piece of a slower-growing market.