The E.W. Scripps Company acquires the satire brand Cracked from Demand Media for $39M
The broadcast company E.W. Scripps announced today that it had acquired the satire brand Cracked from Demand Media for $39 million. Scripps, which last year traded its newspaper properties for the broadcast properties of Journal Communications (and then Journal Media, the new newspaper company, sold out to Gannett), is looking to beef up its digital holdings.
This is a common move from legacy media companies which are either not good at launching new brands, or just plain easy targets for mergers and acquisition pros. Several major magazine companies have announced acquisitions of digital brands with the idea of growing their digital revenue opportunities while simultaneously gutting their sales and editorial teams in a self-defeating and desperate effort to reduce their red ink.
For Santa Monica-based Demand Media, which owns the brands eHow and Livestrong.com, today is a nice pay day and should help to keep the lights on.
“This transaction leaves Demand Media with a more focused portfolio of businesses, significantly strengthens our balance sheet, and positions us to drive profitable growth moving forward,” said Sean Moriarty,CEO of Demand Media. “Through Cracked’s evolution it became apparent that it would benefit long-term from joining a media company with deep roots in the digital media landscape and a proven strategy for leading the way in over-the-top audio and video. Scripps is an outstanding organization and we believe the Cracked business and team will be well served under their new ownership.”
E.W. Scripps shares are trading down on the news in after hours trading.
Cracked is, by the way, an interesting property. It is, as someone on Twitter said, an old media property owned by a new media property, sold to an old media property.
Cracked was launched as a humor magazine in 1958 and evolved over the years, with its current digital incarnation bearing little resemblance to its original vision, which was much more like Mad magazine.
Here is the announcement from E.W. Scripps of their acquisition.
CINCINNATI, Ohio – April 12, 2016 – The E.W. Scripps Company has acquired multi-platform satire brand Cracked, which informs and entertains millennial audiences through a high-traffic website, mobile apps, original digital video, social media and a popular podcast.
Cracked’s award-winning editorial team has been known for decades for smart humor that blends comedy and satire with social criticism.
“Cracked is the expert in using clever humor to engage a younger audience that is very loyal to its brand,” said Rich Boehne, chairman, president and CEO of Scripps. “Its editorial vision brings a fresh perspective to the way the next generation creates and consumes news, information and entertainment.”
Cracked ranks in the top tier of digital humor-focused brands and has a strong following among younger consumers, especially affluent millennial males. Regularly ranking first or second among comedy sites according to comScore, Cracked’s audience is loyal and deeply engaged. A full 50 percent of Cracked.com’s audience comes directly to the site, and users spend an average of 8 minutes engaging with the text and video — attractive metrics that are rarely matched by digital publishers in today’s environment of hyper-fragmentation and reliance on social media.
Cracked is an advertising-supported business with the scale to deliver impact for brands seeking to reach millennial consumers.
Scripps and Cracked’s current owner, Demand Media, have agreed to a $39 million cash purchase price. Cracked had revenue in 2015 of approximately $11 million and was profitable.
Cracked adds to the growing portfolio of Scripps digital and over-the-top brands. In 2015, Scripps purchased podcast industry leader Midroll Media, expanding its reach into over-the-top audio. Also in 2015, the company repositioned and accelerated the expansion of Newsy, its OTT video news brand. Today, Newsy has reached distribution agreements with the majority of the emerging OTT TV platforms, including Sling TV and Apple TV.
“Cracked is a natural extension of the Scripps strategy to take a leadership position in high-growth content marketplaces,” said Adam Symson, Scripps chief digital officer. “Scripps will help Cracked reach new and larger audiences as it continues to build its brand on the web, in over-the-top video and audio and on other emerging platforms.”
Headquartered in Santa Monica, California, Cracked launched in 1958 as a humor magazine. It was purchased in 2007 by Demand Media, which focused on growing the website Cracked.com.
The Cracked team will continue to operate out of its Santa Monica offices and will be led by Mandy Ng Rusin, general manager and vice president, and Jack O’Brien, vice president and editor-in-chief.
“Scripps is a natural partner for Cracked as we continue to invest in creating high-quality content focused on original journalism, social commentary and pop culture analysis, all through a comedic lens,” said Ng Rusin. “Our companies share a nimble approach to testing new digital platforms to reach and engage audiences and advertisers.”