Only three media companies — Buzzfeed, Vice Media, and Vox Media — meet the definition of a “unicorn,” or a startup valued at more than $1 billion. The three have very different growth stories (see the chart below), but they all have attracted large, young and returning audiences – and major investors, both public and private.

Publicly traded companies (whose capital comes from stock markets) often invest in proven startups with a goal of eventually integrating them (or one of their products) into the company. Disney, for example, intending to benefit from Vice’s cable TV launch, invested $400 million in the company in 2015. At about the same time, NBCUniversal, a wholly owned subsidiary of Comcast, invested $400 million in Buzzfeed to facilitate a television partnership, and also invested $200 million in Vox.

Private investment, though, has a different end game. Private equity is a large infusion of money (often in the hundreds of millions) by investors who raise those funds from institutions and wealthy individuals. (Compare that to venture capital – a type of private equity – which tends to flow to earlier-stage startups and takes a smaller financial stake.) Private equity firms (such as TPG, which invested $450 million in Vice Media in 2017) take a large, long-term stake in a more established company with a goal of eventually selling the company or stake at a substantial profit. In the newspaper space, for example, private equity (and hedge fund) deals have become more commonplace, as evidenced by the 2019 purchase of Gannett by GateHouse Media, whose holding company, New Media Investment, is managed by Fortress Investment Management.

Unicorns typically have three options to satisfy their public and private investors, namely: 

  1. Selling shares to the public in an initial public offering, or IPO. But like all companies that grow fast and feel pressure to generate revenue, Vice, Vox and Buzzfeed have experienced setbacks. All three companies have struggled with profitability, and all have laid off employees. Buzzfeed has been criticized for allowing advertisers to influence content; it has also struggled with public perception of its seriousness as a news producer. Most recently, its workforce unionized, creating more internal conflict. Vice suffered from accusations of fostering of a ‘boy’s club culture’ that resulted in Shane Smith’s departure as CEO. Circumstances like these can erode confidence in the companies’ focus and sustainability, and thus weaken prospects for a successful IPO.
  2. Selling the company (in whole or in part) to another company, but to date, none of the legacy media companies already invested in these unicorns has taken the plunge.
  3. Remaining private, as they are now, but private equity investors will at some point expect a return on their investments. This puts a privately held company in a challenging position, forcing it to rely on a limited pool of private investors to grow (as opposed to selling shares to the public), and as a consequence, limiting its liquidity and growth potential. 

Despite having achieved scale and visibility, the long-term prospects for these unicorns remains up in the air.[


About the Author

This article was written by Melanie Faizer,a senior lecturer in Journalism & Electronic Media at the University of Tennessee, where she teaches courses on media entrepreneurship, digital news reporting, and editing. She used to work for Bloomberg News. Reach her on Twitter at @melaniefaizer.

Recently Published

Key Takeaway: Airports often lead to unusual behavior, such as drunken brawls and flight diversions. The psychology of travel can influence this behavior, as the promise of vacation can shift our mindset into anticipation and liberation. The overwhelming noise, crowds, and constant hustle can overload our senses, leading to stress-induced irritability and unexpected outbursts. Airports […]
Key Takeaway: Over 8,500 shipwrecks from two devastating world wars pose a significant threat to marine ecosystems and coastal communities. These underwater time capsules contain up to 6 billion gallons of oil, munitions, toxic heavy metals, and chemical weapons. The degradation of these wrecks is accelerating due to rising ocean temperatures, increasing acidification, and more […]

Top Picks

Key Takeaway: South Korea’s cultural exports have surged to unprecedented heights, with the latest season of “Squid Game” solidifying its position as a global entertainment powerhouse. The “Korean Wave” or Hallyu, which includes TV series, movies, animation, and music, has generated approximately US$3.7 billion annually for South Korea through exports, consumer spending, and tourism. The […]
Key Takeaway: A study published in Nature Astronomy found a strong consensus among scientists that extraterrestrial life exists in the universe. The survey, which involved 521 astrobiologists and 534 non-astrobiologists, found that 86.6% agreed or strongly agreed that some form of extraterrestrial life exists. The study also found that 67.4% of astrobiologists and 58.2% of […]
Key Takeaway: Researchers are using genome-scale metabolic models (GEMs) to study the complexities of microbial life, offering innovative solutions to climate change and space challenges. GEMs simulate the vast network of metabolic pathways within living organisms, allowing scientists to test and predict microbial behavior across diverse environments. They provide a detailed framework for understanding organisms’ […]
Key Takeaway: The “Wirkin” bag, a $78 imitation of Hermès’ Birkin bag, has gained popularity on TikTok, attracting millions of users. The bag, a clever portmanteau of “Walmart” and “Birkin,” allows everyday consumers to partake in high-end fashion without the exorbitant cost. The trend reflects a broader shift in societal values, where symbols of wealth […]
Key Takeaway: In 2022, scientists achieved the “experiment of the century” at Lawrence Livermore National Laboratory, marking the first time a fusion reaction produced more energy than consumed. This achievement has attracted billions of dollars in private investment, particularly in the United States, to advance fusion technology. However, a myriad of engineering challenges remain before […]

Trending

I highly recommend reading the McKinsey Global Institute’s new report, “Reskilling China: Transforming The World’s Largest Workforce Into Lifelong Learners”, which focuses on the country’s biggest employment challenge, re-training its workforce and the adoption of practices such as lifelong learning to address the growing digital transformation of its productive fabric. How to transform the country […]

Join our Newsletter

Get our monthly recap with the latest news, articles and resources.

Login

Welcome to Empirics

We are glad you have decided to join our mission of gathering the collective knowledge of Asia!
Join Empirics