As expected based on reports of advanced negotiations, Meredith Corp., the largest U.S. magazine publisher, has agreed to be acquired by Barry Diller’s IAC/Interactive.
The $2.7-billion/$42.18-per-share all-cash transaction will bring Meredith’s large stable of about 40 brands, including People, Better Homes & Gardens and Allrecipes, into IAC’s Dotdash unit, publisher of 14 digital brands including Dotdash, Verywell, Investopedia, The Spruce, Byrdie and Brides.
The combined company, to be branded Dotdash Meredith, will be among America’s 10 largest digital publishers, reaching about 175 million unduplicated online consumers monthly across categories including home, health, food, finance, parenting and beauty.
Together, the companies generated more than $1 billion in advertising revenue and more than $1 billion in ecommerce sales to retail partners last year.
In 2023, the combined company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) are projected to exceed $450 million.
The new company will combine Meredith’s advertising capabilities, a huge trove of first-party data and strong advertiser relationships with Dotdash’s ecommerce and performance capabilities.
In its fiscal year ended in June, Meredith reported digital advertising revenue of $429 million and print ad revenue of $427 million — marking the first time in its history that digital edged past print.
The combined company expects more than 70% of 2021 pro forma adjusted EBITDA to come from digital.
“Meredith is already seeing record digital growth and we think Dotdash can help accelerate that growth," IAC CEO Joey Levin said in the announcement.
Speaking to investors, Dotdash CEO Neil Vogel — who will lead Dotdash Meredith — said Meredith's advertising team is more experienced than IAC’s, noting that Meredith generates about twice as much revenue per website visit. "There's so much stuff that we're going to learn from Meredith," Vogel added. "They're bigger than us. They've been at this longer than we have. And a lot of the things they've done with data are far beyond what we've done."
Vogel also said that print publications would continue to be part of the media mix of the new company, with print investments focused on profitable, top-performing brands.
Meredith has 36 million subscribers and already reaches 95% of U.S. women and more than 190 million U.S. consumers monthly across digital and print media. That includes 150 million through its digital network, but the two companies’ online audiences have overlap.
Meredith is also the world’s second-largest brand licensor through deals including a Better Homes & Gardens partnership with Walmart.
Dotdash, which says it currently reaches about 100 million consumers online monthly, has reported 17 consecutive quarters of double-digit revenue growth.
Parent company IAC has in recent years acquired, then spun off, digital businesses including Expedia, Ticketmaster, Lending Tree and, most recently, Match Group and Vimeo.
Dotdash Meredith will be based in IAC’s New York headquarters, with a continued “presence” in Des Moines, Iowa, currently its headquarters, a spokesperson told The New York Times.
In an email announcing the sale to employees, Meredith CEO Tom Harty said Meredith to decided to sell because of the “premium price” offered by IAC, as well as the strong fit between the two companies, according to the Des Moines Register.
"Dotdash has stressed a commitment to Des Moines, where our roots have been firmly planted since our founding and where we'll have a continued presence," Harty wrote to employees, about 800 of whom work in Des Moines. He also wrote that current employees’ jobs “are not changing” as a result of the sale.
In an investor call about the proposed deal, Dotdash CFO Tim Quinn said the company would cut about $50 million in costs next year because of "duplicative corporate overhead," according to the Register.
However, in a subsequent investor call on Wednesday, Vogel said he is not planning “cost synergy” cuts. “Our playbook is going to drive audience, performance, and help the brands maintain their stance in the digital world that they have in the print world,” he said.
Corrections: As now reflected in the article, Tim Quinn is CFO of Dotdash, not IAC, and the remark about "cost synergy" was Vogel's, not Levin's.