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Purely Destructible, Online Media Asks What Happened
Every good idea, media included, germinates on the web. But the digital marketplace is not without pitfalls. For news and entertainment pure players - web-only media - the inevitable Darwinian shake-out is always just shout away. Oh children, woe be onto you for disappointing the investors.
Well-known American pure players Vice Media and BuzzFeed “missed revenue targets” for 2017, reported the Wall Street Journal (WSJ) (November 16). Then Mashable - “a one-time digital media darling,” said NeimanLab (November 17) - agreed to be acquired by publisher Ziff Davis for US$50 million; far, far, far from the US$250 million valuation 18 months ago. Telecom Verizon subsidiary Oath, owner of HuffingtonPost (HuffPo) and Yahoo, is shedding about 4% of its workforce, reported DigiDay (November 16).
BuzzFeed, founded in 2006, may or may not go ahead with a planned initial public offering (IPO) next year. Board members are “worried,” said the WSJ. “They say when there’s a bubble or lots of money flows into startups, you have a lot of people who come in because they want to make a lot of money,” said BuzzFeed chief executive Jonah Peretti, quoted by Business Insider (November 26). “It’s just a lot harder than it looks.” Bloomberg (June 7) valued BuzzFeed at US$1.7 billion when NBCUniversal invested a second US$200 million in two years. An IPO would allow NBCUniversal owner Comcast to cash-in (or cash-out) of its investment. It’s called liquidity. NBCUniveral also invested in Vox Media in 2015.
Vice Media’s value jumped to US$5.7 billion after a US$450 million cash injection from private equity house TPG this past summer. Shortly thereafter 60 employees were laid-off in a “reallocation of resources,” reported deadline.com (June 19). Led by colorful chief executive Shane Smith, Vice Media operates more than a dozen websites, on-line TV channel Vice News, cable TV network Viceland and a music company, all targeting Millennials around the world. Company executives have recently been caught-up in sexual misconduct allegations both in the US and Canada, reported Daily Beast (November 15), certain to irritate investors.
Legacy US tech-hobbyist publisher Ziff Davis, owned since 2012 by tech investor j2 Global, is “close” to buying well-regarded tech-related news/blog portal Mashable for US$50 million, reported Bloomberg (November 16). Founder Pete Cashmore has run out of money in that pivot to video. Turner Broadcasting, subsidiary of Time Warner, invested US$15 million in Mashable last March to develop video synergies. Earlier this autumn the WSJ (September 24) reported German broadcaster ProSiebanSat.1 Media “interested,” but more recently that company has become a take-over target.
Among observers of digital media there has been general agreement placing blame on Google and Facebook for hoovering up nearly all the digital advertising. Banner ads, native ads, programmatic ads are roundly debated among the digital media natives who, each and every one, convinced investors they’d pay off the debt with ever expanding money from advertising. Small to medium sized online media portals - or anything else - just aren’t very attractive to investors. Any encore to Axel Springer’s majority acquisition of Business Insider in 2015 for US$340 million has faded.
"I'm not sitting on the sidelines hoping that a big media company is gonna buy my company," said former BuzzFeed president and current Cheddar chief executive Jon Steinberg to Hollywood Reporter (November 20). "That's not going to happen, and that's not a proactive way of building my business. Prayer is not a strategy."
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