Private media mergers have some singing ‘No Money, No Problems’

Group Nine Media acquired POPSUGAR for $300m and valued itself at $1B in the process, continuing a media trend of suspect valuations.

October 9, 2019

Earlier this week, Group Nine Media acquired POPSUGAR in a deal that valued the women’s lifestyle brand at $300m and the combined company at $1B. But Group Nine’s valuation prior to the POPSUGAR deal was just over $600m. Could something be… off?

The new media landscape is shifting… and looking shifty

The Group Nine/POPSUGAR deal isn’t the first that’s raised eyebrows in the past month. Vox Media acquired New York Media — parent to New York magazine — for a reported value of $105m, and Vice Media acquired Refinery29 for $400m. 

By joining forces, these media companies are hoping to haul in bigger audiences and become more competitive with Google and Facebook for ad revenue. And maaaybe, if they can prove their profitability, some media giant will scoop them up for even more money.

Sounds like the cash is flowing

Yeah, except that these aren’t cash-only deals. The companies are dealing mostly in stock and arbitrarily assigning value to those assets. 

The only way to know how much a private company is really worth is if it sells in an all-cash deal or goes public. However, there are hints that some of these deals aren’t as valuable as the companies let on.

Vice investor Disney has written down its $400m investment in the company, meaning the mouse isn’t expecting to see a return on its money.

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