“Blackstone’s financing was always intended specifically for acquisition opportunities, targeting larger deals than we had pursued in the past,” said Recurrent Ventures director of communications Cathy Hebert.
“Shortly after the announcement, the economy and the M&A market changed dramatically,” Hebert added. “Since Recurrent already had scale in our core verticals, we were disciplined in evaluating new opportunities. Together, we have consistently assessed properties in the market, but since the announcement, Dwell was the only brand that we believed was additive to Recurrent’s portfolio.”
Hebert went on to add that the company had to adjust its business to align with post-Covid traffic trends and the volatile advertising market, and that “decisions [to divest brands] were not driven by necessity, but by careful consideration.”
Blackstone did not respond to a request for comment.
A raise goes wrong
In 2022, Recurrent Ventures was coming off a banner year.
Its portfolio included publishers like Bob Vila and Outdoor Life that catered to enthusiasts in the home renovation and outdoor communities—categories that housebound Americans spent heavily on in 2020 and 2021.
As quarantined consumers logged long hours online, shopping for ways to spend their stimulus checks, the company saw record web traffic, advertising revenues and affiliate business. In 2021, it generated around $15 million in EBITDA (earnings before interest, taxes, debt and amortization) on $50 million in revenue, according to two sources.
In early 2022, as the economy began to falter, Recurrent Ventures saw an opportunity. If it could raise capital from a deep-pocketed financial partner, the media company could spend through the coming down market, snapping up undervalued properties at bargain prices, according to three sources.
Around the same time, Blackstone began more seriously investing in the streaming and media businesses, bankrolling the acquisition of production companies Hello Sunshine and Moonbug Entertainment and spending nearly $4 billion on the effort.
By spring 2022, the two groups had reached a deal: Recurrent Ventures would gain access to a $300 million line of credit to finance its acquisition of editorial titles, and Blackstone would gain a foothold in the digital media business.
According to the terms of the initial agreement, Recurrent Ventures could draw down funds to make acquisitions with minimal scrutiny if the price was below a certain threshold, according to two sources familiar with the deal structure. If the transaction was above that threshold, the process would be more onerous.
