Popular Science Owner Recurrent Ventures Raises $300 Million

From a Wall Street Journal story by Alexandra Bruell headlined “Popular Science Owner Recurrent Ventures Raises $300 Million on Blackstone-Led Round”:

The owner of publications such as Popular Science and Outdoor Life said it has raised $300 million in a round of funding led by private-equity firm Blackstone Inc., marking one of the biggest investments in online publishing in recent years.

Recurrent Ventures, whose 24 publishing brands also include home-design specialist Domino and culinary publisher Saveur, said it plans on using the funding to buy additional media properties. Having more scale will help Recurrent’s pitch to advertisers, and could appeal to investors as the company explores an initial public offering of stock or a possible sale to a larger media company, said Chief Executive Lance Johnson.

“In 12, 24, 36 months we’ll have options, whether that’s going public or combining with someone else,” he said.

The firm will likely focus on acquiring media brands it can tuck into its existing categories, such as automotive, technology, home and military, but will also explore such areas as videogames, sports and travel, Mr. Johnson said.

Blackstone’s bet on Recurrent comes despite diminishing investor appetite in advertising-supported digital publishers. Several years ago, financial and strategic investors were piling into the sector, resulting in some big-ticket deals. Vice Media raised $450 million from TPG in 2017, while Comcast Corp.’s NBCUniversal invested $400 million in BuzzFeed through a pair of deals in 2015 and 2016.

But the influx of cash cooled off as the sector’s big companies struggled to keep up fast sales growth and justify their lofty valuations, in the midst of competition for ad dollars with Facebook and Google. BuzzFeed, which became the first digital media company to go public, through a merger late last year with a special-purpose-acquisition company, has had a rough welcome in public markets, losing more than half its market value.

“If you think about the successful digital models in the publishing business, they are few and far between,” said Douglas Arthur, an equity analyst at Huber Research.

In 2018, private-equity firm North Equity began building a portfolio of media companies, starting with the acquisition of automotive brand The Drive. North Equity spun out the Recurrent Ventures brand last year as an umbrella for its media properties.

Recurrent’s Mr. Johnson said the company has diversified its revenue to be less reliant on advertising. It generates about half its revenue from ads, while a further 30% comes from e-commerce and affiliate content, which generates revenue when readers purchase products featured in its articles. The remaining revenue comes from subscriptions, events and product and content licensing, such as content deals with tech platforms, he said.

Mr. Johnson declined to discuss Recurrent’s detailed financials. The company said its operating-profit margin—on the basis of earnings before interest, taxes, depreciation and amortization—was over 20% in 2021. It hopes to increase that margin to more than 30% in the next few years.

Recurrent has raised over $400 million in total, including a $75 million capital investment in October 2021 by Powerhouse Capital and Raga Partners, and other previous financing. Powerhouse Capital and Raga Partners have committed additional capital in the latest round. North Equity remains a major shareholder.

Blackstone has lately been active in pursuing media deals, especially in the entertainment arena. Candle Media, a firm it backs that is led by two former Walt Disney Co. executives, last year announced a $900 million buyout of Hello Sunshine, the media company founded by Reese Witherspoon, and a nearly $3 billion acquisition of Moonbug Entertainment Ltd., the company behind the hit children’s shows “CoComelon” and “Blippi.”

Earlier this year, the Blackstone-backed firm agreed to buy a stake in Will Smith and Jada Pinkett Smith’s media company, Westbrook Inc.

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