9 Potential Buyers For Essence Magazine
In an environment of consolidations among African American media assets and declining advertising sales for all print media, Time Inc. announced this week that it wants to sell a majority stake in Essence Magazine — probably the No. 1 buy for people trying to reach black women.
The announcement set off robust speculation about who will/could/should buy the leading African-American women’s lifestyle publication.
Essence was originally black owned. Time Inc. bought 49 percent of Essence Communication Inc in 2000, and the remaining 51 percent in 2005, putting Essence under white ownership.
The Essence Music Festival is the largest annual gathering of African-American musical talent in the U.S. It’s been ongoing for 23 years, and earned more money than the magazine made in a year, then-CEO Joe Ripp said in 2015, Wall Street Journal reported.
The magazine’s circulation has remained steady at about 1.1 million over the last five years, but newsstand sales have dropped by about two thirds, according to the Alliance for Audited Media.
So who will buy Essence? Will it be someone who has existing Black media assets? We’ve compiled a list of nine possibilities. A digital media and tech investor weighed in on our picks, speaking to Moguldom on background.
9. A private equity firm like Summit Partners, Blackstone, Bain or KKR
I think Essence is probably too small for them. These are firms that cut huge checks.
There’s a select group of firms that feel comfortable investing in media. They understand it. So you have to find a private equity firm that is comfortable and understands media. Whether it’s African American or not, I don’t think they care less.
— Moguldom’s digital media and tech investor source
Verizon Communications Inc now owns Yahoo and AOL.com, operating as a single business unit called Oath. The goal in combining them is to build a strong third alternative in the fast-growing digital advertising market currently dominated by Google and Facebook, LA Times reported. In addition to Yahoo and AOL, other Oath properties include HuffPost, Makers, Tumblr, Build Studios, Yahoo Sports, Yahoo Finance and Yahoo Mail.
“Co-founded by Arianna Huffington in 2005 as the Huffington Post, the news site now called HuffPost (or HuffPo) rose to prominence with its mix of liberal politics, web-savvy journalism and blog posts from outside contributors. AOL purchased the site for $315 million in 2011. Verizon acquired AOL for $4.4 billion in 2015. Huffington herself left the company (in 2016).”
In 2011, after its purchase by AOL, The Huffington Post absorbed many of AOL’s Voices properties including AOL Black Voices, which was originally established independently in 1995 as Blackvoices.com.
Blackvoices.com first appeared as a link on the Orlando Sentinel website, according to Wikipedia. Barry Cooper founded it as an African-American message board and news website. The site got a $5 million investment from Tribune Company, the Orlando Sentinel parent. From there, Blackvoices.com grew and eventually had 1 million-plus registered users. Later, the site was sold to AOL-Time Warner. Its content targeted African-American culture, but the site was never black-owned or brought by a black majority-owned company. You had to be an AOL member to join the site. General Motors in 2000 announced a multimillion-dollar three-year deal to advertise on the site. Some members were upset with the sale of Blackvoices.com from Tribune to AOL to the Huffington Post.
Could Oath buy Essence to strengthen the black voices brand?
7. Bob Johnson, founder of BET
Billionaire businessman and investor Robert L. Johnson may have sold BET, but he never left the industry. Johnson created media company RLJ Entertainment in 2012 to build “one of the largest independent distributors of digital and video content globally,” according to Hollywood Reporter.
RLJ owns popular branded channels Acorn TV (British TV) and UMC (Urban Movie Channel). These grew fast since their launch through development, acquisition, and distribution of exclusive rights to a large library of films and TV series. RLJE’s titles are also distributed in a variety of digital distribution models in North America, the U.K. and Australia.
In 2016, RLJE partnered with AMC Networks, which owns some of the most recognized brands in entertainment including AMC, BBC AMERICA, and WE tv (a leading network for black audiences). Acorn TV and UMC have the potential to cross-promote, develop and distribute content to reach even more viewers.
A $65 million investment deal gives AMC the option to take a controlling stake in RLJE down the road. Johnson owns or holds interests in hotel real estate investment; private equity; financial services; asset management; auto dealerships; sports and entertainment; and video lottery terminal gaming.
AMC has invested in the digital space in recent years, including in dance entertainment-focused YouTube network DanceOn and Latino-focused digital media firm MiTu.
Is there room for a women’s print lifestyle magazine?
Revolt, Sean “Diddy” Combs’ digital cable TV network launched in 2013. As part of its arrangement to acquire a minority interest in NBCUniversal, Comcast — with the committed to carry several minority-owned networks including Revolt.
Every year since 2011, Diddy has been No. 1 on the Forbes list of wealthiest hip-hop artists on Earth. His net worth is $820 million, although Shawn “Jay Z” Carter is catching up.
Diddy’s conglomerate, Combs Enterprises, includes Revolt Films and Revolt TV, Bad Boy Entertainment, Sean John, Combs Wine & Spirits (Cîroc and DeLeón), AQUAhydrate, The Blue Flame advertising and marketing agency, Bad Boy Touring, Janice Combs Publishing, ENYCE, Zac Posen, and the Combs Foundation.
All of it is overseen by a woman, Dia Simms, president of Combs Enterprises. It’s a new role for Simms as of May, 2017, Variety reported. She’ll oversee business activities across Combs’ companies and investments and will work with him to grow them. She rose fast through the ranks, becoming chief of staff, then general manager of The Blue Flame Agency, then executive vice president and then president of Combs Wines & Spirits.
“I’ve worked in a variety of industries where women have not had their fair share of opportunities to have true leadership,” Simms told Variety. “Sean Combs is a visionary, and I think what makes it such a great working relationship is that I’m good at operationalizing the ideas he comes up with…how can I make it scaleable? What is the ROI? You have to approach things with the mindset of we can do absolutely anything here.”
Could that include buying Essence?
5. Magic Johnson Enterprises
One of the most successful black businessmen in the U.S., Magic Johnson owns a private equity firm, Magic Johnson Enterprises, that is worth more than $1 billion, according to Celebrity Net Worth. Johnson has invested in Starbucks (he sold his chain in 2010 for $75 million), 24 Hour Fitness, T.G.I. Fridays, and AMC Theaters. He owns a movie studio and marketing company. He sold his share of the Lakers to billionaire Patrick Soon-Shiong for $50-to-60 million, Celebrity Net Worth reported. In 2012, Johnson became part owner of the Los Angeles Dodgers in a group that purchased the team for $2 billion.
Could Magic Johnson be in the market for Essence magazine?
“Any time there’s any African American property on the market, they go to him,” said a Moguldom.com media and tech investor source. “He’s looking for investment opportunities.”
4. Urban One
Radio One announced its name change to Urban One Inc. in late 2016. The company’s individual divisions include Radio One, TV One and iONE Digital, formerly Interactive One. Urban One’s newest addition to iONE Digital and the Urban One family is BHM Digital, an acronym for Bossip, Hip-Hop Wired, and Madame Noire — brands acquired from Moguldom Media Group.
The BMH addition solidified iONE Digital as one of the largest players in the African-American media space, and was part of a push to build a portfolio of brands rooted in black culture with strong millennial audiences, according to a press release about the May, 2017 acquisition.
Detavio Samuels, president of iONE Digital, said the acquisition was part of iONE Digital’s strategy to build a portfolio of “meaningful brands.”
“The brands we are acquiring have great recognition amongst consumers, clients, and agency partners,” he said in the press release. “In today’s ever-changing media landscape, it is imperative that we build a portfolio of brands with distinct voices and engaged audiences across multiple distribution channels. These three brands fit that strategic filter and we look forward to working with the existing teams to catapult these brands to the next level.”
In 2001, the Black Entertainment Television lost its status as a black-owned business when BET Holdings was bought by media conglomerate Viacom for $2.3 billion. Viacom gained access to the fast-growing black-oriented media market.
BET’s Centric has undergone a series of rebrands, all geared toward black women. In 2014, Centric became The First Network Designed for Black Women. A new logo was introduced and the Centric website was relaunched in March 2015. In April 2017, as part of restructuring Viacom’s operations, it was announced that Centric would be relaunched at a later date as female-skewed station BET Her, according to Variety.
Buying a magazine with a brand as recognizable as Essence’s could make sense. Or not.
Here’s what Moguldom’s media and tech investor source said about Viacom:
Viacom is a little quirky in that, compared to a lot of others, they don’t do a lot of acquisitions. You’d have to show a lot of synergy. There’s a lot of buyers out there that, if there’s any print involved, they won’t take a look at it.”
Univision purchased The Root in 2015, starting its media buying spree with an online publication targeted at black readers. Buying Essence could help Univision expand further into African American media.
Univision announced in 2016 that it would cut its workforce by 6 percent, losing up to 250 jobs as part of a restructuring, according to Deadline.
The cuts “come as we look to strategically bring together several distinct digital media companies into one powerful and nimble digital publishing entity, with many distinct passion points for many distinct, growing groups of readers, listeners and viewers,” said Isaac Lee, chief news, entertainment and digital officer, in a memo to staffers.
1. Discovery Communications/OWN Network, Oprah Winfrey
Discovery Communications is in investment mode. In October 2016, Discovery announced a $100-million investment and strategic partnership with a newly formed digital content holding Company, Group Nine Media. The new company consists of Thrillist Media Group, NowThis Media, The Dodo and Discovery’s digital network Seeker (along with its production studio SourceFed Studios).
Discovery makes sense as our No. 1 pick to buy Essence, according to a digital media and technology investor who spoke to Moguldom on background. He said:
“Essence has a good reputation in the market and has to be considered a premier property. Anything owned by Time still has a certain luster to it. There’s been an advertising decline — nothing they can do about it. It’s a phenomenon of the entire print industry but they’ve got a healthy event business, and people — buyers in the media — love events, especially if they’re run well. (Essence) is probably the No. 1 buy for people trying to reach African American women.”