2021 VC-Backed Media M&A Already Tops Last Year’s Total

2021 VC-Backed Media M& Already Tops Last Year's Total
Photo illustration VIP+; Adobe Stock

The year is still months away from being over, but no more time is needed to declare 2021 as a particularly heady time for media M&A dealmaking. 

That’s what’s suggested by data provided exclusively to Variety Intelligence Platform by Crunchbase, which found there have been 22 M&A deals involving venture capital-backed media companies that are U.S. based in 2021 YTD, a figure that’s up from 16 in 2020. 

The number of venture-backed media company M&A deals globally in 2021 YTD is already at 33, up from 26 in 2020.

For Crunchbase’s analysis, companies that were categorized as being in the news, publishing, journalism or podcast industry were counted. But even when companies categorized as being in the podcast industry are excluded, the number of media deals globally and in the U.S. only are already up from 2020.

Companies are considered venture-backed for the analysis if they received seed, venture or corporate venture funding.  

A news publisher M&A deal of 2021 that contributed to this Crunchbase count includes when Bustle Digital Group, which owns pubs like Bustle and Nylon, in July acquired Some Spider Studios for nearly $150 million. Some Spider Studios, which has received venture funding, owns digital media brands incuding Scary Mommy and Fatherly.

Another publisher deal Crunchbase counted was when VC-backed digital media company Recurrent Ventures, which owns media brands Popular Science and Outdoor Life, purchased tech and science site Futurism in late July.  

A common theme in M&A deals among publishers, or companies that report news, is that each company involved gets greater reach that better positions them to attract ad dollars.  

Crunchbase doesn’t count companies that go public via SPAC merger in its M&A deal count, but BuzzFeed, which acquired Complex as part of its June-announced SPAC merger, is one such example.  

It may seem natural for M&A deals of venture backed-media companies in 2021 to have already surpassed the level from last year given the massive economic disruption caused by the initial coronavirus outbreak. But remember that the pandemic disrupted the businesses of all publishers, and that likely made some businesses more open to M&A in order to accelerate recovery.  

BuzzFeed, which made $30 million in cost cuts in order to better weather the pandemic, acquired HuffPost in November 2020. And Group Nine, which laid off 7% of staff in April 2020, formed an SPAC in late December to fund acquisitions of companies in industries including digital publishing.

The flurry of M&A involving venture-backed news companies will continue as the year closes. The latest sign of publishers’ healthy M&A appetite was Vox Media's announcement yesterday that it’s acquiring cocktail website Punch. 

Internet services company J2 Global, which owns Ziff Davis (the owner digital media brands like IGN and Mashable), last week announced that it’s rebranding as Ziff Davis in Q3 2021. Ziff Davis will begin trading publicly next month and receive $1 billion in cash to spur dealmaking, per WSJ. 

German publisher Axel Springer, which owns brands including Insider and eMarketer, was said to be in talks to acquire Axios, which has raised close to $60 million in funding, for roughly $400 million, The Information reported in May.  

However, Axel Springer on August 26 agreed to acquire Politico in a deal valued at $1 billion. While some expect that acquisition to quash the Axel Springer-Axios talks, Axel Springer chief Mathias Döpfner hasn't ruled out the possibility of that deal.  

The push for scale will remain a priority among publishers as the duopoly of Facebook and Google continue to attract a significant portion of digital ad dollars spent worldwide. They were projected by eMarketer in April to account for 52.3% of global digital ad spend in 2021, up from 49.8% in 2020. 

Media consolidation will also continue among entertainment companies that don’t rely on breaking news as their main source of content differentiation. The WarnerMedia-Discovery and Amazon-MGM deals, which Crunchbase didn’t count in its 2021 deal tally because neither involve companies that rely on VC funding, help set the stage for media company dealmaking earlier this year.  

For example, LeBron James’ entertainment company SpringHill Company was exploring a sale at a valuation as high as $750 million, The Information reported in July. Meanwhile, Legendary Entertainment, A24, and Imagine Entertainment have all explored M&A possibilities.