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Mergers and acquisitions are shaping the media landscape of the future

2019 has seen an unprecedented number of companies acquiring or merging with other businesses. In the first chapter of this year’s Media Moments 2019 report, Chris Sutcliffe explores whether this a sign of inevitable decline, or if these businesses will be powerhouses for decades to come.

When we were writing last year’s Media Moments report, we decided not to include a chapter dedicated to the media mergers and acquisitions of 2018. It wasn’t that the mergers that year were unimportant – Meredith’s acquisition of Time, Inc in the January before last has had ramifications far beyond that twelve month span – but that it seemed to be business as usual for a beleaguered media industry.

Jonah Peretti of BuzzFeed, which for so long was held up as being the model for digital publishing success, made the stark pronouncement in November of last year that further mergers were not just inevitable but desirable, in order that publishers act as a unified bloc against the power of the duopoly, stating: “If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money.”

Heading into 2019, the wider consensus was that media M&A would continue apace, but that the overall price paid for some media companies would decrease in line with a weaker economy. In fact, the M&A mania ramped up over the course of the year, at both the regional and international levels, but that prediction has been widely borne out.

The reason we’ve decided to include this chapter this time around is that some of the media-specific acquisitions speak volumes about the priorities of the companies involved, and provide a bellwether for the industry as a whole.

Where are we now?

Much of the significant M&A activity in 2019 was in service of bolstering and broadening publisher’ existing offerings. Vice’s acquisition of Refinery29, which closed in November for a reported $400million, is undoubtedly an example of this. Even when the two publishers’ unduplicated audiences are combined to reach 53 million monthly unique users, that still lags behind competitors like BuzzFeed and G/O Media, so while that extra reach will certainly be welcome, the real value of the acquisition comes from elsewhere.

Vice, despite its counter-culture, tradition eschewing nature, skewed largely male. Refinery29 was quite the opposite, having stayed true to its mission of being for millennial women. Off the bat, then, the acquisition allows Vice and its advertising partners access to a new audience. 

While Refinery29’s founders Justin Stefano and Philippe von Borries were clear at the time that the deal would allow the company to continue to operate independently, it was also noted that Refinery29’s expertise in creating experiential marketing solutions would complement Vice’s focus on branded content, effectively covering a potential gap in its agency Virtue’s capabilities. At a time when simply producing branded content isn’t enough to differentiate a publisher, having that multi-media capability is an extra string to Vice’s bow.

It’s possible, though, that the whole acquisition was in service of laying the groundwork for future sale, this time of the combined Vice/Refinery29 to a larger publisher, as Business Insider suggested. 

While Vice and Refinery29 have complementary commercial capabilities, their editorial values are very different. By contrast, the acquisition of New York magazine by Vox Media appeared to be much more of a true partnership; Nieman Lab’s Joshua Benton even remarked at the time that Vox is “the most print-like of the big digitals; you can see the DNA of magazine layout in some of its designs, and its mix of both editorial big swings and webbier front-of-book content brings along some print editorial values”. 

Naturally, then, when the NYT broke the news that Vox was set to acquire New York Media in an all-stock transaction back in September, the mood was positive. From Vox’s perspective it filled a print hole in a multimedia portfolio that includes a Netflix show and digital properties in a variety of verticals; for New York Media it means investment in the business and a show of confidence only a few months after it laid off 5 percent of its staff in March. Perhaps more importantly, despite cultural similarities there is remarkably little overlap between the two publishers’ properties, both in verticals and demographics.

While both of those acquisitions were made with an eye on expansion, other mergers have been made with a more defensive strategy in mind (and have been significantly less well-received). In November the merger of US-based regional newspaper chains Gannett and GateHouse Media was made final, creating one media powerhouse that owns approximately one in six daily titles in the country. 

Upon the deal closing, Michael Reed, chairman and CEO of GateHouse’s parent company New Media, said: “This combination will create the leading U.S. print and digital news organization with deep local roots and national scale. Together, we will be stronger, with a more viable path to growth for our shareholders and employees, while sustaining journalism in hundreds of markets across the country and enhancing the services we provide to small and mid-sized businesses nationally.”

So why the reticence to celebrate among pundits? Well, as Ken Doctor noted at the beginning of the year: “Consolidation (and the cost-cutting that comes with it) remains the dominant strategy in the daily newspaper industry. If revenue continues to drop at or even near double-digit levels, the consensus thinking is that radically reducing expenses through consolidation is about as good a card as anyone has to play.”

That cost-cutting inevitably comes at the expense of employees in the name of ‘synergies’. Unfortunately, when it comes to regional newspapers, that reduction of headcount frequently falls in editorial and product teams, which can then lead to newspapers failing to serve their local audiences and seeing further falls in readership as a result.

Nor is it a phenomenon that is confined to the US. The tail end of the year in the UK saw much speculation about the sale of JPI’s regional newspapers and their respective digital properties, and what that potential consolidation might mean for UK media. Until late November the frontrunner was Reach Plc, though at time of writing those negotiations had reportedly collapsed. Ready to step into the breach? Newsquest, a subsidiary of Gannett.


To read the final part of the chapter on what to expect in 2020, plus case studies, download the full Media Moments 2019 report.

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