On this week’s episode we hear from Lance Johnson, CEO of Recurrent Media. You might not have heard of them (yet), but you will have heard of some of their 25 brands – Donut, Domino, Saveur, Popular Science, and most recently, MEL magazine. He tells us about the group’s acquisition strategy, how they’re different from the usual VC companies we encounter, and what you need to do to get bought by Recurrent.

In the news roundup the team does some digging into the disappearing Times story about Boris Johnson offering his then-mistress a job. We take a look at the timeline, the ‘legal issues’ that might have caused the story to be pulled, and asked what The Times’ strategy of silence is doing to its reputation and trust in the media. In the NIBs we discuss Substack cutting its headcount, say goodbye to the print edition of Time Out, and ask why Bonnier News and Amedia are launching a digital newspaper in Russia. Read our letter to find out about how you can help us during this make-or-break year.

Here are some highlights:

Recurrent’s goal

We’re a four year old digital media company, and we’ve come a long way in just those four years. We’re really trying to build a different kind of media company, one that’s really putting editorial first, remaining true to our brand values while remaining profitable, and really trying to make Recurrent the best place for creative talent, so they can focus on creating great written content, great podcasts, great video, and delegate the rest of the things to our Recurrent leads.

[The stereotype of private equity] is not really what we’re doing here. Every business we’ve bought, we’ve come in and hired people, and brought over existing teams, where we’re investing in them.

We bought Bob Vila right at the beginning of 2020, and it was just four people. [Bob had] been keeping the business relatively small, it’s just four people, it was profitable. We came in and said, “Bob, look at all these different ways we can grow that brand and all these other channels.” Today, Bob Vila is 40 people, and it’s one of our most profitable brands. So we’ve more than 5X the revenue, 5X the audience, it’s a very profitable business. That’s what we’re looking for, really these iconic brands, great businesses that’ll benefit from investment and work really well with the Recurrent model.

How Recurrent is structured

Organisational structure is something we’ve focused a lot on here. I’ve been at different media companies over the years and learned good and bad lessons from those experiences. When I was at Yahoo, 20 years ago, a lot of the businesses we bought, we kind of destroyed the culture, because we fully consolidated them. Integrations are tough. When I was at Naspers, we didn’t integrate anything.

So Recurrent, we’re really trying to go for a golden middle approach, if you will, where I think of the individual brands as federated states; giving those creative people the kind of freedom and independence they crave to create great content. And then the engineering and IT and product, the HR and talent and recruiting, the monetisation, that sits with Recurrent as service functions to the core of the business, which are the people creating the great written content, the great videos, the great podcasts, things like that.

What makes a brand an acquisition target

We’ve been highly acquisitive; I think we acquired nine businesses last year. We’ve raised $75 million in a round we announced in October, and then we just announced a round led by Blackstone of $300 million. So I think going forward we’ll continue to be very acquisitive, we’re growing from a much, much larger base now. But we’ll try to stay very disciplined, especially as the market environments become a bit more uncertain.

[An acquisition target] first and foremost, it’s great content. We always say audience first, revenue second. And you’re only going to have a committed audience, an engaged audience, a delighted audience – and by delighted we mean, an audience that spending more and more time with you each month voting with their time. So first and foremost, it’s great people creating great content.

And then if we see an opportunity where, hey, we can distribute that content to a wider audience, we can amplify that content through social media channels, we can monetise that content much better through programmatic advertising, or direct advertising or affiliate commerce.

Recurrent’s revenue breakdown across 25+ brands

So the main focus for us, we’re really an 80/20 business now. The three main revenue streams are programmatic advertising, direct advertising, and affiliate commerce. And then that other 20% are areas where we’re placing strategic bets, where we think one of those could really grow to be one of the most significant.

When we look out three, four or five years, we think the business will be less than 50% dependent on advertising. My hunch is subscriptions, memberships will be one of the larger ones there. We also do merchandise around some of our video brands. Events I think post-COVID, there’s a real hunger to get out there, interact with people, meet some of our personalities.

We acquired just a few months ago Business of Home, which has a large Future of Home event in the fall in New York. I think those kinds of events are things we can do with some of our other brands, because the audience for these brands are so passionate about these these categories, about the personalities we have at these brands.

Top story:

A story in the Times headlined “Johnson tried to give Carrie top Foreign Office job during affair” mysteriously disappeared from later editions. Private Eye has been doing some digging into the reason why if you’d like to read more yourself.

  • Salacious details aside, this has raised huge issues about trust and government influence at the Times – which if it’s legal issues is tricky – but it’s not a good look. Nor is their lack of explanation. It’s an uncomfortable exposition of the close ties between political bodies and journalists in the UK.
  • Times publisher News UK is simply stating they spiked the story due to ‘legal reasons’ and haven’t given any specifics.
  • The comments sections of The Times – restricted to paying subscribers – are now full of questions about why the publisher pulled the story.
  • “By pulling something like this without comment, The Times is playing a risky game,” Tinworth writes. “And it’s a game that might have financial implications for it. If it’s seen as a willing accomplice to a prime minister whose popularity is in steep decline among its core market, it loses the trust that binds people to the brand emotionally.”
  • One of the UK’s leading news brands jeopardising audience trust when it’s already at an all-time low isn’t great, to say the least.

News in brief:

  • Substack is laying off roughly 14% of its workforce. The newsletter-focused startup is seen as the darling of the publisher-focused newsletter world – but as a startup it is especially exposed to the market tumults that surround probable recessions. As such the company is saying it is cooling its ambitions and will continue to grow and expand, albeit at a smaller pace. Is this VC funding issue woes again, or is there something more fundamental about Substack’s business model here?
  • Time Out magazine has just printed its last edition after 54 years. The publisher will focus on digital information, as well as the expansion of its food markets. But Colin Morrison writing on Flashes & Flames says there are still opportunities in print for savvy city-focused media organisations. I think that’s about scaling your ambitions, city by city, not globally like Time Out’s private equity investors wanted.
  • Bonnier News and Amedia are doing the opposite to many media orgs pulling out of Russia and are actually launching a new digital newspaper in the country. Repost aims to reach a young audience inside Russia, providing and curating Russian language news from a team of about 10 journalists. Both companies have long histories in Eastern European press. “Our contribution to Repost now is a natural extension of our journalistic pledge to strengthen freedom of expression in Russia”, Amedia’s Vice President Marte Ingul says.

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