Despite the global COVID-19 pandemic, or perhaps because of it, mega deals and stock market listings are back in fashion in the media sector. According to Press Gazette’s media deals tracker, there has been a blur of deal activity in the media sector this year. News companies are also looking for capital for growth in stock markets with new listings.
The big deals in the media sector (you can read more in a recent INMA post by my fellow bloggers Ken Harding and Justin Eisenband of FTI Consulting) come on the back of the strong revenue statements by some news companies, including News Corp and The New York Times Co.
In August, News Corp CEO Robert Thompson announced the company’s fiscal year 2021 was “the most profitable year since we created the new News Corp in 2013.” The company’s profitability improved by 26% for the year, and it had “a record number of digital subscriptions, record revenue, and profits.” It seems the company’s share price has reflected that as it rose 46% between August 2020 and August 2021.
Similarly, in August, The New York Times Co. announced strong results for the second quarter of 2021. CEO Meredith Kopit Levien said the company “recorded US$93 million in adjusted operating profit, a 78% improvement compared to the same quarter in 2020.”
While The New York Times has not been involved in the most recent acquisitions, the two companies’ financials perhaps signal there is scope for further deals in the media market. Already during 2021, News Corp “has been on the acquisition trail,” as the Australian Financial Review puts it. For example, it has already spent US$1.2 billion on digital data company Oil Price Information Service and $US275 million on Investor’s Business Daily. These deals strengthen its Dow Jones business.
More recently, German media group Axel Springer confirmed it is buying Politico. The estimated value of the deal is US$1 billion. In a press statement, Axel Springer noted Politico will strengthen the media company’s portfolio “with an authoritative voice offering inside perspective and analysis of politics and policy in Washington D.C., across the U.S., and around the globe.” In the United States, the deal gives the German company a significant reach.
The stock market listings are also back in favour. In August, Forbes confirmed it is combining its business with Magnum Opus, a publicly traded special purpose acquisition company. As a result, Forbes becomes a publicly listed company. Forbes CEO Mike Federle says that “with this transition into a publicly traded company, Forbes will have the capital to accelerate growth.”
BuzzFeed is also planning to merge with a publicly listed shell company, 890 Fifth Avenue Partners, and list in Nasdaq. The company’s valuation is expected to be around US$1.5 billion. Fast Company noted that, “through scaling up, BuzzFeed hopes to create a digital ad powerhouse that can take on the likes of Google and Facebook, the ad duopoly dreaded by the media industry.”
It is interesting to see if these listings create buzz among the investors and what the appetite is for the media companies’ shares.