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How Magazines Like New York Became M&A Targets for Tech Companies Like Vox Media

The paper magazine has increasingly become a luxury good, as more publishers jettison titles into digital lifeboats.

The internet’s years-long rising tide keeps pulling readers away from legacy print editions — and has spurred a new wave of dealmaking in the sector. Many of the buyers have been wealthy tech tycoons or digital-media firms facing their own challenges in achieving profitability. The latest on this front: Internet company Vox Media last week inked a deal to acquire New York Media, publisher of 51-year-old New York magazine.

Other pacts cut from similar cloth include Dotdash, an internet publisher owned by Barry Diller’s IAC, buying Brides from Condé Nast; and upstart Bustle Digital Group acquiring fashion and lifestyle pub Nylon. (Penske Media Corp., publisher of Variety, is part of the M&A swirl too: PMC acquired full ownership of Rolling Stone earlier this year.) Similar business pressures are driving digital-media mergers: Vice Media just announced that it’s acquiring Refinery29, in a deal that reportedly values female-focused R29 at $400 million.

There’s no huge mystery to what’s behind the trend. Overall, print advertising has been shrinking for years. In 2019, U.S. spending on newspaper and magazine print ads will fall 18%, to $15.4 billion, research firm eMarketer projects. To survive, print-centric brands need to cut costs, diversify revenue streams and amass greater online scale, all while vying for digital ad dollars against the likes of giants such as Google and Facebook.

The industry is witnessing “the acceleration of traditional and digital players joining forces to create opportunities to capitalize on the changing market conditions — but also to ensure financial and operational performance,” says Tom Harty, CEO of media conglomerate Meredith Corp.

The execs behind the Vox-New York Media tie-up say the merged company will reach 125 million monthly unique visitors across their premium content outlets and achieve synergies of scale. The new entity brings together Vox brands like SB Nation, The Verge and Curbed with New York Media’s flagship magazine and digital offshoots like Vulture, The Cut and Intelligencer. The new Vox will have approximately 1,200 employees, roughly 30% of them from New York Media.

Mag Pacts
Recent transactions in print publishing

Sept. 2019 Vox Media buys New York Media
June 2019 Bustle Digital buys Nylon
June 2019 Condé Nast’s W sells to publisher of Surface magazine
May 2019 IAC’s Dotdash buys Brides from Condé Nast
May 2019 Discovery buys Condé Nast’s Golf Digest
May 2019 Sports Illustrated sold for $110 million Authentic Brands, which transfers publishing operations to Seattle-based digital platform company Maven
Jan. 2019 PMC buys full control of Rolling Stone
Nov. 2018 Fortune sells for $150 million to Thai business magnate Chatchaval Jiaravanon
Sept. 2018 Time sells for $190m to Marc and Lynne Benioff

“The line I’ve been using is that we, together, are building the leading modern media company,” says Vox chairman and CEO Jim Bankoff. “Technology has given audiences the opportunity to consume content across all conceivable platforms. The best-positioned companies are those that can best reach audiences on those platforms.”

Pam Wasserstein, CEO of New York Media (who will assume the title of president at Vox), insists that doing the all-stock deal wasn’t a necessity for either party. “This is opportunistic,” she says. “It’s a play around a vision we’d already been working toward.” She and Bankoff say there won’t be mass layoffs, but Wasserstein adds, “That’s not to say there won’t be cost efficiencies.”

The reality, though, appears to be that New York Media was anxiously looking for a stronger digital path forward after it had been losing money to the tune of $10 million annually, per The New York Times. This year, both Vox and New York Media laid off 5% of their workforces. In a cost-cutting move, New York  magazine will reduce its rate base 38% in January 2020 — dropping its circulation from 325,000 to 200,000. A spokeswoman says that’s to focus “on our highest-value, most loyal readers,” adding, “The magazine remains our calling card.”

When Dotdash purchased 85-year-old Brides this year, it had already decided it would kill off the bimonthly print version. The last dead-tree iteration of the bridal mag to hit newsstands was the August-September 2019 issue. “We don’t reflexively say, ‘No print — oh, my God,’” says Dotdash CEO Neil Vogel. But “the economics to sustain a print magazine at the quality we wanted wasn’t something we wanted to pursue.”

The opportunity for Dotdash, whose reader-service sites include Verywell and Investopedia, was to take a well-known, trusted media property in Brides and reinvent in an entirely digital way. An audience of young, digital-native brides-to-be also gives Dotdash more heft in pitching advertisers on its ability to get in front of Gen Z and millennial females across its network.

“Building brands it super, super hard,” says Vogel. “If you have something like Brides to get a head start, that’s a win.”

Yet for some publications, print will live on for a good long while.

Time retains a healthy and profitable print business, says Edward Felsenthal, editor-in-chief and CEO, although its current circulation of 2.3 million weekly readers (up from 2 million in 2017) is well off its peak of more than 4 million in the mid-2000s. The newsmagazine is now owned by billionaire Marc Benioff, co-founder of Salesforce.com, together with his wife, Lynne; they purchased it from Meredith for $190 million last year.

“We’ve gone from a quarter-to-quarter framework to owners who are encouraging us to think five, 10, 25 years out,” he says. The industry shakeout, Felsenthal says, is “water finding its own level” as magazine publishers adjust to new realities.

On the other hand, having a deep-pocketed white knight take stewardship of a flagging print title hasn’t always panned out. In 2012, Facebook co-founder Chris Hughes bought The New Republic — selling it four years later, admitting he hadn’t anticipated how hard it would be to transform “an old and traditional institution” into a digital-forward biz.

“These are very, very difficult companies to operate,” says Bustle Digital CEO Bryan Goldberg. “It’s much less sexy than billionaires imagine.”

Goldberg’s company has bought up eight companies in the past two and a half years, including distressed digital outfits like Mic, Gawker and The Outline. This summer he acquired another struggling property in Nylon, the 20-year-old fashion, beauty, music and pop-culture media brand. He’s planning to revive Nylon in print (it ceased two years ago) but only for special issues. “Done a certain way, print has a future,” he says. “But it needs to be a premium product.”

In a competitive digital-ad market, digital media companies have needed to expand beyond online editorial into events, branded content, premium video, podcasts and commerce to make the model work. Goldberg predicts an age of “digital exhaustion” in the decade ahead that will make print and experiential businesses more valuable: “People want to unplug, and connect with real people.”

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