Forbes, the iconic business publication, announced that it would be going public through a merger with Magnus Opus Acquisitions at a valuation of $630 million. The deal continues the flurry of M&A and IPO activity that has been going on in the space over the past year such as Beacon Street Publishing going public in a $3 billion deal, the acquisitions of the Hustle by Hubspot, and Morning Brew being acquired by Business Insider. In addition, there have been SPACs for Buzzfeed, Bustle, and Vox.
There's been somewhat of a turnaround in the publishing business. In the pre-Internet era, these were cash-cows for their owners as they were one of the best ways for companies to advertise to customers. Of course, this was destroyed by the Internet as content essentially became free and then the aggregators like Google
Now, there's been some improvement in their circumstances especially as the world moves towards more privacy and less ad-targeting. These companies still get millions of targeted, eyeballs, which is improving their prospects especially if advertising on Facebook and Google becomes less effective. They've also been successful in increasing revenue with sponsored content, organizing conferences, and affiliate deals.
Forbes Background
Forbes has fluctuated with these trends. For decades, it was one of the most well-known business publications in the world. Forbes was founded in 1917 by B.C. Forbes. The company was handed down to Malcolm Forbes and then Steve Forbes, reaching an estimated valuation in the low billions with headquarters on Fifth Avenue in NYC. By 2009, the company was valued at $750 million which declined to $250 million within a few years as the publishing industry cratered.
During the last two decades, Forbes' business model also shifted. At one time, it had hundreds of reporters on staff all over the world doing original work. Now, it's reliant on contributors, many who are not paid and others paid on a per-view model. This has led to criticism that the company has become more of a 'content farm' and a sharp turn from its origins.
SPAC Plans and Outlook
The latest deal values the company at $630 million which is an improvement over the past decade and shows the company's success in stabilizing itself and developing new revenue sources. Companies are now creating their own content to reach customers which is another potential opportunity for Forbes with its sponsored content arm.
Forbes is expected to use the proceeds to create products to sell to consumers. In 2020, it generated $180 million in revenue and currently has 23,000 paid subscribers. The company's current management team will stay in place.
It's tough to have a strong stance on Forbes. There's certainly been an improvement in the economics of media publishers, but it's still hard to see whether it's a temporary blip or the beginning of a new trend. Therefore, investors should stay away as it's hard to imagine Forbes reclaiming its previous glory.
