During the venture capital-funded digital media boom of the 2010s, startup founders often voiced world-conquering ambitions. In 2014, Vice Media co-founder Shane Smith bragged: “We won’t be the next CNN or ESPN or MTV. We’ll be 10 times that size,” The Hollywood Reporter reported. A year later, BuzzFeed CEO Jonah Peretti informed staff that they were building “a global, cross-platform network for news and entertainment … something that has never existed before.” Half a decade later, those grandiose visions are gone as both companies claw to claim a larger share of advertising revenue in a landscape dominated by Facebook and Google. Their risky gambit? Go public to raise cash and roll up more of their competition through a special-purpose acquisition company (SPAC). Yet the turn to SPACs by BuzzFeed, Vice, Bustle Digital Group and Group Nine seems “like a last resort.” The issue is that the private financing that could support major acquisitions appears to be drying up. Venture funds financed the early growth of digital media firms, and Hollywood giants poured in nine-figure investments, but those entertainment giants are now spending billions to build Netflix competitors, and the venture funds for media are targeting companies in hot growth areas like gaming, augmented reality and sports betting, leaving these large, previously capitalized digital media companies in limbo. Over the last few years, these companies have been snapping up smaller competitors. Then early this year, BuzzFeed closed a deal to buy HuffPost. BuzzFeed made the first SPAC move, but fellow digital giants Group Nine Media, BDG and Vice are all engaged in similar maneuvers for an IPO via a blank-check company.
