How do SPAC's fix media exactly?

just a question

I’m not going to pretend to fully grasp the mechanics of SPACs, and how this form of fundraising is different or more advantageous compared to private equity or traditional IPOs. Smarter people have done better explanatory work on this than me - someone who pretends to understand finance (Luma CEO Terry Kawaja has a very helpful thread here, while Recode’s Peter Kafka offers an even more blunt assessment).

I also realize there are lots of types of SPACs. But it’s the media ones I’m most puzzled by (Business Insider has identified at least 11). For starters, ex-Cosmo Editor in Chief Joanna Coles just started one with one of the guys who owns the Islanders, and the plan is to put together $4.7 billion to “target opportunities in emerging markets and the consumption habits of Millennials and “Generation Z”, reported the Financial Times

I don’t really know what that means, but it’s fun to picture Coles going to an Islander game.

Then of course is the SPAC rolled out by Group Nine - owners of Thrillist, the Dodo, PopSugar, etc. - and speculation that this may be a new way to create a giant digital media rollout of sorts. Bustle Digital Group founder and CEO Bryan Goldberg told CNBC that it’s possible that five of the biggest independent digital media companies Group Nine, BuzzFeed, Vox, Vice and his firm, may turn into three.

Which seems to make sense? After all, there’s been speculation about some sort of mega-merger for years, ever since Business Insider founder Henry Blodget was spotted having breakfast with Gawker’s Nick Denton back in 2013.

My question is, however you get the cash to make it happen, what would mushing say Vice and Vox together accomplish? If an infusion of cash were simply all these companies needed to soar, wouldn’t Vice’s plan to become “ten times CNN” have worked?

So how do rollups fix digital media’s fundamental business model challenges?

I suppose if you put three of these big brands together, you can cut lots of jobs since you won’t need multiple finance and HR accounting departments, and you can have a single sales team out in the market - and you put everyone on the same CMS and video platform and all that. But while operating leaner may help these companiess mildly more profitable - does it solve their duopoly problem (as in, all the ad money is going to Facebook and Google)?

Sure, a BuzzFeed/Vox/Vice mashup can tout some serious scale in the market. And maybe you can combine these companies’ branded content studios and analytics operations so that bigger, more potent, and customized ad packages can be pushed out. That doesn't change your inherent demand problem. Programmatic display advertising has never been that robust for these sites - and that market is only going to get tougher with cookies going away. Meanwhile, branded content deals - i.e. native advertising - are no longer shiny and new.

I wonder if we are seeing some media founders chase the myth of clout, while banking on efficiency. For instance We often hear a theoretical digital media conglomerate compared to a Conde Nast or a Hearst. It’s true, these magazine giants made such arrangements work well, sharing back-office resources while letting individual titles thrive and occasionally collaborating on big deals.

That all worked wonderfully in the 1990s when the print market was fat, and you could have nine associated editors for each title. Now, approximately 350 reorgs later, I’m not sure this is the media model you want to emulate. After all, isn’t Bustle Digital Group, which includes re-treads like Elite Daily and Mic.com, essentially a small-scale rollout? Has it set the world on fire?

Especially now, when the tech platform battle is only getting more heated, things are going to get tough for anyone in digital advertising. As we’ve seen during the pandemic, Facebook, Google and Amazon have thrived, while Pinterest, Snap and TikTok have become imposing ad players. The question I’d ask is how exactly a BuzzleVice entity stops that momentum.

It’s possible I’m looking at this through far too narrow of an advertising lens. Maybe SPAC-ing helps BuzzFeed go far bigger into physical retail and or affiliate marketing. Maybe Vox can double down on supplying shows to Netflix and other streamers.

I’m also not going to pretend I know more about this business than some of the other SPAC leaders, like cable legend John Malone or Dish Chairman Charlie Ergen (though why you’d want to roll up legacy telecoms and cable systems is beyond me - ask Verizon and AT&T how such combos are going).

I am sure of the fact that rich people will come out richer from these things. I’m just unclear on how the ad business does.