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What the SPAC Happened?

by News Desk

After a brief bout of enthusiasm, media companies are rethinking their love affair with SPACs.

While it was only a year ago that all digital media companies could talk about was the SPAC, short for the more clunky Special Purpose Acquisition Company, shifts in the media landscape mean many have soured on the idea.

Also known as “blank check” entities, SPACs act as a shell company that investors pour money into via an initial public offering. Those funds are then used to acquire a company that will inherit its stock exchange listing minus the traditional time-consuming IPO process.

Last year, the term was at the tip of every digital media exec’s tongue with traditional revenues and funding drying up as companies slashed marketing budgets amid the pandemic, more ads were swallowed up by Facebook and Google and venture capitalist interest in digital media waned. This all made consolidation, especially on the digital side, an increasingly attractive option. 

But as with anything, a lot can change in a year, and many of those companies that were excited about SPACs have since changed their tune.

The latest is business publication and tracker of the wealthy, Forbes, which announced Wednesday that its shareholders have terminated the agreement with Magnum Opus Acquisition Ltd., a Hong Kong-based SPAC that planned to take it public in a deal worth $630 million. It was originally meant to close in the first quarter of the year.

“Our digital transformation has delivered double-digit revenue and EBITDA growth over the past year, which not only significantly outperformed the financial targets provided at the start of the SPAC transaction last year but continues to deliver high-quality cashflows and compelling year-over-year and sequential growth since then,” said Mike Federle, CEO of Forbes. “This is a testament to the incredible team we have assembled at Forbes that is delivering across our Media, and Brand Extensions business, as well as our newer consumer conversion strategy that has shown triple-digit revenue growth over the past two years.”

While Federle did not provide a specific reason in his statement for the about turn, SPACs have been on the outs with many companies as regulators increasingly voice concerns about them. In particular, the Securities and Exchange Commission has proposed new regulations around disclosures, marketing practices and third-party oversight, while Sen. Elizabeth Warren also has them in her sights.

“I think it’s important to consider the economic drivers of SPACs. Functionally, the SPAC target IPO is being used as an alternative means to conduct an IPO,” SEC Chair Gary Gensler said in March. “Thus, investors deserve the protections they receive from traditional IPOs, with respect to information asymmetries, fraud and conflicts, and when it comes to disclosure, marketing practices, gatekeepers and issuers.”

At the same time, some companies that have gone through the process are struggling.

Here’s what happened to the other media companies who were at one point or another, mulling SPACs:

Bustle Digital Group

In January 2021, it was first reported that Bustle Digital Group, the owner of Bustle, Mic and Nylon, among others, was exploring a potential merger with blank-check acquisition companies aiming for a valuation of at least $600 million. Not long after, founder and CEO Bryan Goldberg confirmed in an interview with TechCrunch that he was indeed mulling entering the SPAC space, but did not comment on the valuation number. He said: “I want to take this company public; I’ve admitted that in the past. I’ve never said it quite this clearly….I think that the SPAC revolution that’s taken place in the last year, it’s not for every start-up, but I do think it’s a good fit for this start-up. The reason I think it’s a good fit for this start-up is one, I know what I want to do with the capital, I want to raise hundreds of millions of dollars, and then I want to go buy a lot of media companies.” Since then, the company has been quiet on its SPAC plans and WWD understands that they have been dropped. A source said execs are continuing to observe changes in the market.

BuzzFeed Inc.

BuzzFeed was one of the few companies that did follow through with its plans to go public via a SPAC, but it did not work out as boss Jonah Peretti had hoped. No amount of cakes, cats, bright yellow OMG signs or appearances from Instagram star Dude With Sign could help make it a hit with investors. BuzzFeed’s first day on the public markets through a merger with 890 Fifth Avenue Partners Inc. saw its stock fall in the double digits and it’s down around 36 per cent in the year to date. This has led the company to shrink its news division, resulting in the March resignation of BuzzFeed News editor in chief Mark Schoofs. His deputy also departed to join NBC News. BuzzFeed is also being sued by a number of employees over its alleged mismanagement of the listing process.

Group Nine

The publisher of Popsugar, Thrillist and The Dodo stood out from other digital companies in the space as it actually set up its own SPAC. In December 2020, in a corporate filing, it unveiled the SPAC Group Nine Acquisition Corp., formed with the goal to go public and acquire other digital media businesses to be combined with Group Nine Media. But exactly one year later, it was acquired by Vox Media, the publisher of New York Magazine, that was also said to be considering a SPAC. According to reports at the time, the two parties began talking in the summer when Group Nine met with a number of companies about a merger through its SPAC. Bankoff told The New York Times: “Going public may or may not make sense based on market conditions and other factors, and we’ll continue to look at that.”


Brooklyn-based Vice Media, once valued at as much as $450 million back in 2017, also tried to go public last year with SPAC 7GC & Co. Holdings. This was all put on ice, however, as investors got jittery and the market cooled. Earlier this month, it was reported that it has tapped bankers as it mulls an outright sale or selling off some of its assets.


For more, see:

The Monthly Fashion Magazine Is No More

The City of New York Brings Legal Action Against L’Officiel USA for Failing to Pay Freelancers

Marie Claire Isn’t Completely Done With Print

What’s Going On With Celine and Vogue?

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