Lack of Bulls in Sports Digital Media Landscape Enabling Minute Media to Collect Assets at a Discount
On Friday January 24th, Meredith Corp. (MDP) announced the sale of FanSided to Minute Media. The fandom-focused sports & lifestyle publisher (think: collective of 300+ team and trend specific destinations) is the 3rd digital sports asset acquired by the venture backed media and technology focused holding company within the last 15 months (see: The Big Lead, The Players’ Tribune). With the addition of FanSided, Minute Media now owns “one of the largest sports audiences in the U.S.” (+/- 90 million monthly users across its portfolio).
Howie Long-Short: While the FanSided acquisition supports Minute Media’s efforts to increase distribution, it's the company's network of team-centric sites that has President and CRO Rich Routman most excited. The senior executive explained that an “aggregation of local communities can be really powerful [for a digital media company that is] putting together advertising programs for brands.” Having the ability to reach a local audience will also “play a significant role in what [Minute Media] wants to do from a sports betting perspective.” Routman maintains that “[the most lucrative] opportunities [will be negotiated] on a local level for the foreseeable future.” With just 14 states currently offering live sports betting, it’s hard to argue the point.
The FanSided acquisition comes on the heels of Minute Media’s November ’19 purchase of The Players Tribune (an outlet that serves as a platform for athletes to tell their stories). Routman believes that combining “authentic [player generated] content with impassioned [fan-generated] content and the widest distribution in sports media - outside of ESPN - will force the market to take the company more seriously.”
There is no macro trend driving Minute Media’s enthusiasm for the U.S. sports digital media business. Instead, it's their track record of success “taking companies from point a to point b” that has given Routman and Co. the confidence needed “to make bigger bets.” The desire to grow distribution rapidly is also driving the aggressive approach. Routman said “organic growth is one thing, but if an upstart digital media entity really wants to dominate the sports landscape it needs to be aggressive, so we’re going to continue to aggregate as many high quality properties as we can.” Look for Minute Media to pursue internationally based assets and established digital audio companies.
When Routman looks at the current digital sports media space, he sees few bulls in acquisition mode; in part, because the established players are unlikely to bother with “small to mid-sized assets.” For Minute Media, that means there is an opportunity to collect properties for less than they might otherwise be worth. “Nobody else is looking at deals [valued between $10 million and $100 million] and it’s enabling us to create a really interesting mousetrap.” The Minute Media business - which is profitable (the company anticipates it will do more than $150 million in revenue in 2020) - generates +/- 60% of its business from a combination of branded content and media, +/- 30% from the use of its technology (think: publishing platform) and the remainder from licensing and syndication.
It’s certainly no surprise that FanSided was sold. MDP - which isn’t in the sports business - had been looking to move the company (along with Sports Illustrated) since it acquired the two former Time Inc. assets in January of 2018. But, it doesn’t appear as if the Iowa based media conglomerate was able to get the $150 million it originally sought for the pair. Authentic Brands Group took down S.I. for $110 million and the NY Post reported that FanSided went for “around $15 million”. While the real number is north of that estimate, it’s nowhere near the $40 million Meredith would have needed to net out the target number.
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