Digital media companies considering going public are watching BuzzFeed’s expected stock market debut next week to see how investors will respond.
Why it matters: A slowdown in SPACs (special purpose acquisition companies) earlier this year pushed some digital media companies that were considering going public via SPAC IPOs away from the idea, such as Vice.
- Sources tell Axios that much of investors’ appetites in the sector will be contingent on how BuzzFeed trades in its first few months.
- Another source notes that institutional investors have became slightly more cautious of digital media investments following the Ozy Media fraud allegations scandal.
State of play: Shareholders of 890 Fifth Avenue Partners, the blank check company BuzzFeed is merging with to go public, will vote on Thursday to approve the SPAC merger.
- If all goes according to plan, both the SPAC merger and BuzzFeed’s $300 million acquisition of Complex Networks would both close by the end of the day Friday, per a source familiar with the process.
- The company would then begin trading on December 6th. BuzzFeed is targeting a $1.5 billion valuation upon combining with 890 Fifth Avenue Partners, Inc. At least one investor, NBCUniversal, was reportedly concerned about the valuation, and losing money on the deal.
Driving the news: BDG Media, formerly Bustle, is still aiming to go public via a SPAC next year, two sources familiar with the matter tell Axios. The company is in talks with SPAC sponsors, but is hoping to have something wrapped up by the second or third quarter of 2022.
- BDG Media, like other digital media firms, is waiting to see how BuzzFeed’s SPAC plays out over the course of the next year, per a source familiar with its plans. The company recently said it would acquire Some Spider Studios, a parenting brand, for $150 million to scale its operations.
- Vox Media is still considering a SPAC IPO, according to two sources familiar with its plans, but the company is exploring a range of options that may not lead to a public market play.
- Group Nine Media announced last year that it had formed its own SPAC that it can be used as a vehicle to take another company public with it. It has until January 2023 to identify a company that it would take public with it. The Information reports that one of the potential companies includes Gary Vaynerchuk’s “VaynerMedia.”
Between the lines: BuzzFeed ultimately decided to go public via a SPAC because it would allow it to go public faster than a traditional IPO, and it would give BuzzFeed the ability to simultaneously merge with Complex Networks.
- The 15-year-old company was aiming to go public prior to the pandemic, but COVID put plans on hold. It was profitable in 2020 and anticipates being profitable again in 2021, per quarterly earnings statements.
What to watch: In preparing for a SPAC, BuzzFeed put forward aggressive revenue and growth predictions, including hitting over $1 billion in revenue by 2024.
- BuzzFeed and Complex together are expected to bring in $521 million in revenue this year, per company reports.
- The company plans to continue acquiring and scaling companies that will help grow its bottom line.