How companies are buying media houses to scale
Companies are purchasing digital media houses to take advantage of the extensive user base, data-driven consumer insights and content creation expertise. This allows them to offer new products and services across different categories. The Good Glamm Group, an Indian content to-commerce company, bought MissMalini Entertainment last year for an undisclosed amount. MissMalini Entertainment is a well-known celebrity media network and talent management network for influencers.
There were other instances in which large companies bought media houses.
HubSpot paid $27 million to acquire The Hustle. Sam Parr founded it in Oct 2021. The Hustle is a media company that created a newsletter, Trends, a SaaS platform, and My First Million, which Parr and Shaan Puri host. Rumors circulating about The Hustle claim that it would generate between $10 and $12 million in sales. This indicates a 2.25x to 2.7x purchase price multiplier.
Penn National Gaming purchased Barstool Sports.
In January 2020, Penn National paid $450million for Barstool Sports. This digital media company was founded by Dave Portnoy and was majority-owned by The Chernin Group. Barstool, which creates pop culture and sports content, had a revenue figure of $90-$100m at the time. This indicates a price/revenue multiple between 4.5x and 5.0x.
Robinhood purchased MarketSnacks
Robinhood, a stock trading company that charges no fees, purchased MarketSnacks, a media brand focused on millennials. Although this acquisition might seem unusual for a leading fintech company worth more than $ 5 billion, it seems sensible considering Robinhood’s growing ambition to be a one-stop shop for young investors.
JP Morgan bought The Infatuation and Frank.
JPMorgan Chase bought The Infatuation (a site that helps students find restaurants) and Frank (a platform for college financial planning). The Infatuation was founded in 2009 by Chris Stang and Andrew Steinthal and is now available in 50 cities in the USA. It offers restaurant reviews and detailed dining guides. Frank allows students to apply for financial assistance and student aid faster. Students can also find affordable online programs for college credits. JPMorgan Chase gained access to Frank’s client list of over 5 million students from 6,000 institutions and schools in the United States.
How does this strategy help businesses scale up?
Businesses can access a wide audience and select communities by purchasing a media house. This strategy is a great way for companies to acquire customers at a low cost. The Good Glamm bought Plixxo, MissMalini and other micro-influencers. One has been a great performer, and the other is a top celebrity and macro-influencer platform. The Good Glamm can now use influencer-led marketing through content to commerce channels for their new products.
What’s the deal for the business buying?
Indian markets aren’t as deep as the ones in China. One brand or one category could make thousands of crores. A brand that sells skincare, beauty, or lifestyle products typically generates between Rs.500 and 700 crore in revenue. Eight to ten brands could generate Rs. 500-700 Crore.
What’s the point of a business being bought?
Good Glamm’s acquisitions over the past 12 months will greatly help the brands acquired. They will get substantial investments to grow and expand. They also benefit from the expertise of professionals in similar or different industries.
