I got a lot of great feedback from my piece on Friday about media acquisitions, so thank you everyone for replying! If you have thoughts about any piece, be sure to hit reply and I’ll get back to you. Maybe I’ll even write about it. Please consider sharing A Media Operator with your colleagues and if you’re new here, be sure to subscribe. Now onto the essay…
When Verizon announced the sale of Tumblr, it was pretty obvious that the conglomerate was rethinking its strategy around media. Hans Vestberg, CEO of Verizon, is a true telecom guy focused on “optimizing growth opportunities in 5G era.”
Where do digital media brands fit in to that strategy? My argument was that they didn’t. According to the Financial Times, Verizon agrees.
Verizon is sounding out potential buyers for the HuffPost website, in the latest phase of the US telecoms group’s retreat from the digital media business.
In recent weeks Verizon has raised a HuffPost sale with potential acquirers, according to two people familiar with the discussions. No formal sale process has been launched and talks remain at an early stage.
None of this should be surprising. Between AOL and Yahoo, Verizon spent just shy of $9 billion. It already wrote down the assets by close to $5 billion. It also cut about 800 jobs from its digital media division earlier this year.
The questions I have are not whether it sells HuffPost, but when and to whom?
In my original piece, I speculated that perhaps Axel Springer could take it over. If we look at the Tumblr acquisition, Verizon cared more about getting the payroll off the books rather than accruing any value around the property. Could Axel Springer come in and get HuffPost profitable like it had with Business Insider?
I have another theory grounded purely on speculation and one I hope doesn’t come to fruition. TheMaven has already licensed Sports Illustrated and purchased TheStreet. In an investor presentation back in September, TheMaven included the below slide:
HuffPost would qualify as an “anchor brand for News + Politics.” If the focus for Verizon is not generating a ton of money from the sale, but is instead looking at cost savings, this sort of a deal would make sense. According to a recent filing with the SEC, TheMaven raised an additional $20 million. Would that be enough to get Verizon to bite? Possibly.
What would HuffPost look like post acquisition? Let’s look at what’s happening with Sports Illustrated.
The Wall Street Journal reported that TheMaven was letting go of 40 people at Sports Illustrated and hiring 200 contractors in their place to cover sports.
Earlier in the day, Sports Illustrated employees sent a petition to Meredith and Authentic Brands. The petition, which was signed by many Sports Illustrated employees, called on the companies to “drop TheMaven and save Sports Illustrated.”
“TheMaven wants to replace top journalists in the industry with a network of Maven freelancers and bloggers, while reducing or eliminating departments that have ensured that the stories we publish and produce meet the highest standards,” the petition said.
Rather than having a centralized newsroom, TheMaven wants Sports Illustrated to have a series sports blogs that are run by independent contractors. In other words? TheMaven is turning Sports Illustrated into a content mill.
Back to HuffPost, it’s easy to imagine the scenario would be similar. Scale back on staff and then spin up a slew of “category” sites that publish content from independent contractors that are likely underpaid if they’re paid at all. If a story did particularly well, HuffPost could then promote the story to the homepage, driving further traffic.
According to Deadspin, this is the same strategy that prospective Sports Illustrated contractors have been pitched on:
Sornsin said in the 60-minute pitch that sometimes Sports Illustrated national staff would “pick up a story” and put a “national spin on it,” but that they would link back to the team sites in those cases. He said this “technique” worked really well for Fox Sports and Scout, which elides the fact that Scout was a failure and that Fox Sports gave up on its digital presence years ago. Sornsin said that this is “great for everybody” because “it gives SI more depth and it gives YOU more exposure and more traffic, and to the user it gives them that really in-depth team coverage that they’re never going to get from a national site.”
To be clear, this wouldn’t exactly be new for HuffPost. A lot of its early growth came on the backs of unpaid contributors with payment in “exposure.” By the time HuffPost announced it was shutting down its unpaid model, it had a self-publishing contributors platform with 100,000 writers that drove 10-15% of the site’s traffic.
Now, this is pure speculation. I’d like to believe that a better media brand will come along, acquire HuffPost, and continue to invest in its growth and success. But as ad businesses continue to struggle and Verizon looks to move away from media, I wouldn’t be surprised if TheMaven became the owner of HuffPost.
What about the tech sites?
I’m curious to see what happens to TechCrunch and Engadget. Although there’s no publicity around the sale of the tech sites, you have to imagine conversations are being had internally. My theory has always been that if Verizon starts selling these sites, IDG would be the right buyer. In my original Tumblr post, I wrote:
Although they’re smaller with close to 70 million sessions a month combined, there are other tech publishers that have much larger networks that could integrate these brands. IDG could be an interesting acquirer of this since it has so many tech brands. Since IDG has both B2B and B2C brands, both would fit.
On the B2B side, IDG owns tech brands like CIO, CSO, and ComputerWorld. On the B2C side, it owns brands including TechHive and PCWorld.
TechCrunch slots in nicely in that B2B side of things. As the primary media company for the startup world, TechCrunch would be a good way for IDG to expose its enterprise clients to startup founders, an audience that I’m not sure they have yet. It always intrigued me that TechCrunch focused on being an ad business versus moving into demand generation and more in-depth marketing services.
Then there are the TechCrunch’s events. When founder Michael Arrington sold TechCrunch to AOL back in 2010 for $25 million, it had only done two Disrupts with the deal revealed during the second one. Now it does multiple events a year. In 2019 alone, it has done seven with another two planned before the year ends.
Couple the events with the fact that TechCrunch is investing more in its paid subscription content and there might be an opportunity there.
All in all, it’s clear that Verizon is uninterested in media. It spent a lot of money building this large network of sites, but the old guard is gone, and the new leaders don’t care about the digital media portfolio.
It’ll be interesting to see how it all shakes out.
Have any theories on who might be a buyer of these sites? Hit reply and let me know what you’re thinking. As always, thanks for reading this post. Be sure to share with your colleagues and if you’re new, consider subscribing. See you on Friday!