Vogue owners stand to profit US$1.4 billion from Reddit – 03/21/2024 – Market

The internet has not been kind to Condé Nast, the publisher of magazines like Vogue and Vanity Fair, whose fortune and influence have diminished in the digital age. But while the web takes away, it occasionally also gives.

The Newhouse family, which controls Condé Nast through its parent company Advance Publications, is poised to reap a profit of around US$1.4 billion this Thursday (21), after the website Reddit is listed on the Stock Exchange. New York Values.

Condé Nast acquired Reddit for a mere $10 million in 2006, later spinning it off into an independent company.

With its amateur production culture, Reddit is far from the meticulously crafted guides in Condé Nast magazines.

The site works as an online forum in which every type of subject can have a community of people, with topics created by members for discussions ranging from everyday tips to literature.

Reddit’s IPO should reward the early and shrewd bet made by the Newhouse family, which owns roughly a third of the shares outstanding.

Advance, which also has major stakes in Charter Communications and Warner Bros Discovery, among other investments, is a privately held company and its finances are closely guarded.

It’s unclear whether Condé Nast itself would benefit from the value of Reddit shares, as representatives declined to comment. Both Charter and Warner Bros have seen significant drops in their share prices over the last year.

Advance is subject to a six-month lockup period during which it cannot sell its more than 42 million Reddit shares.

Condé Nast, like many other media organizations, recently announced a round of layoffs, and more cuts are expected following the resolution of a dispute with its union.

In January, the company transferred Pitchfork, the hipster music magazine, to GQ. CEO Roger Lynch said this month that revenue in 2023 was unchanged from the previous year, partly blaming a difficult advertising market.

Reddit was spun off in 2011, and one of the site’s founders, Alexis Ohanian, later credited the Newhouses with providing “an absurd level of autonomy.”

In a sense, the Newhouses’ profits accord with a business strategy established by the family patriarch, Samuel I. Newhouse, a Horatio Alger-like character who rose from poverty to create one of the country’s richest media dynasties.

Newhouse, who founded Advance in 1922, was an early specialist in troubled assets, buying distressed newspapers at reduced prices and turning them into profit generators.

Condé Nast itself was a grande dame in decline when Newhouse bought the publisher in 1959, sensing an opportunity in fashion magazines.

Robert A. Sauerberg Jr., the former Condé Nast CEO who remains on Reddit’s board, also owns nearly 50,000 shares in the technology company, according to public filings.

His stake would potentially be worth $1.6 million under the target price of $34 per share.