Group Nine’s SPAC Plan: What Could Come Next

Cheyne Gateley/VIP

Group Nine Media is making it harder to close out 2020 without forgetting one of the year’s buzziest acronyms: SPAC. 

The Discovery-backed digital media company formed a special purpose acquisition company (SPAC) to merge with other digital media businesses, according to an SEC filing on Monday. 

SPACs are essentially shell companies formed with the sole intention of raising money via an initial public offering and merging with or acquiring another company. 

Group Nine, owner of brands like The Dodo and NowThis, is also open to its SPAC merging with or acquiring businesses in adjacent industries like social media and e-commerce, although it has not named specific targets.  

The news confirms a December 14 WSJ report that said Group Nine was considering buying competitors via SPAC and is the latest signal the digital media space will further consolidate. 

Just last month, BuzzFeed agreed to acquired Huffpost from Verizon in a stock deal. And Group Nine last year bulked up by purchasing female focused publisher PopSugar in deal that reportedly valued the combined company at nearly $1 billion 

Group Nine is now interested in acquisitions that would expand its reach and boost its attractiveness to digital advertisers, the WSJ reported. 

A prime target that could help Group Nine get there is Bustle Digital Group, which has recovered from the pandemic and expects 2020 to be its first profitable year, according to The Information. 

Bustles portfolio reached more than 75 million unique visitors in 2019, per ComScore, and the company has previously billed itself as the leading publisher reaching millennial women.  

That seems to make the company a complimentary purchase to PopSugar, which at one point was the most engaged-with U.S. women’s lifestyle site in 2019, according to ComScore. 

Bustle, which has been highly acquisitive over the years, seems open to taking meetings as well. Bustle Founder and CEO Bryan Goldberg told The Information in September that “the SPAC thing is interesting” and that Bustle “would be logical candidates for something like a SPAC.” 

Group Nine could also target a media company less dependent on advertising, such as a paid newsletter business like TheSkimm. The business, which is also female-focused, launched in 2012 and counts 7 million subscribers. 

TheSkimm started looking for an acquirer as its subscriber growth slowed in 2019, according to Business Insider.  

Getting more involved in the subscription business could be attractive for Group Nine as more consumers in the U.S. become willing to pay for news. 20% of U.S. respondents said they paid for online news content in a January/February 2020 survey by Reuters Institute for the Study of Journalism, up from 16% in 2017 and 9% in 2016. 

This willingness to pay for news helps explain the mad-dashtopaid digital publishers have made over the past few years. Business Insider, which has broken into the subscription biz with products like its BI Prime tier, in October purchased a controlling stake in (now free-to-read) newsletter provider Morning Brew.  

Group Nine could similarly diversify à la TheSkimm. 

In terms of adjacent industry targets for Group Nine, short-form video app Triller might come to mind as it’s been in discussions with SPACs to go public (read our write-up on why Triller is eyeing the SPAC route).  

But Triller seems like more of a long-shot candidate for Group NineWhile Triller has star power and seemed to capitalize on TikTok’s government woes of the summer, questions surrounding its user growth (which Triller has vehemently pushed back on) could make the app less appealing to Group Nine.

It’s also not all up to Group Nine. Triller may prefer to work with a company that has experience in growing a social platform, rather than one that’s specialized in news publishing, for example. 

The Group Nine merger-acquisition talk brings to mind what an unusual amount of SPAC activity went on in 2020. There were 123 SPAC IPOs in Q1-Q3 of 2020, up 232% from the same period in 2019, according to FactSet. 

Other media companies that have gotten in on the SPAC action in 2020 include Playboy Enterprises and CuriosityStream