Vox Media on Monday announced it has signed an agreement to acquire Group Nine Media in a transaction that combines two of the best-known digital media companies.
Vox, which has grown aggressively over the last decade, owns several high-profile media brands, including SB Nation, New York, The Verge and Vox.com. Group Nine, for its part, owns Thrillist and PopSugar, among others.
The deal creates one of the largest media companies in the U.S. It is expected to close in early 2022. Under the terms, Vox will have 75% ownership, with the remaining 25% going to Group Nine, The Wall Street Journal reported. Vox Media CEO Jim Bankoff will lead the company, and Group Nine founder and CEO Ben Lerer will join the board.
The combined company is expected to generate more than $700 million in revenue in 2022 and more than $100 million in profit, according to the WSJ, which makes it substantially larger than BuzzFeed, which generated $421 in 2020 revenue and had earlier indicated that it will exceed $500 million this year.
Vox will be a top 10 U.S. media company by audience, according to ComScore, with nearly 350 million social media followers, 6 billion monthly video views, and an advertising marketplace that reaches hundreds of millions of people each month.
“With this acquisition, Vox Media will extend its leadership into new categories, formats and distribution platforms by welcoming more beloved properties into our portfolio,” Vox Media CEO Jim Bankoff said in a press statement.
The Vox-Group Nine transaction comes just days after BuzzFeed went public in an IPO last week, while acquiring the media company Complex Networks. BuzzFeed’s performance is viewed as a bellwether for other digital media companies. But in the intervening days since it began trading on Nasdaq, the market has not been kind to BuzzFeed. After opening on Dec. 6 at $10.95, and increasing briefly to $14.28, the BuzzFeed stock ended its first week at $6.07 and was trading on Tuesday morning around $6.20.
Like nearly all media-industry mergers, the objective is scale.
“This combination will not only create unparalleled scale and revenue diversification, it will bring together some of the most popular brands, premium content and creative and business talent in the world,” Lerer stated.But scale for scale’s sake rarely works in media. Or, put another way, it has produced some of the biggest flame-outs of the last 20 years. For example, Verizon threw in the towel on Verizon Media, its bid for media scale with the combination of Yahoo and AOL. And just weeks ago, Meredith, which acquired Time Inc. amid much fanfare in 2018, divested its entire magazine-media portfolio to Dotdash. Then there was Yahoo’s own efforts to scale up, including through the acquisition of Tumblr. Or the famous AOL-Time Warner merger of 2000. The list goes on. Scale, in an era dominated by Google and Facebook, with their unreachable scale, is a dubious errand.