A number of brands have parted ways with editorial entities they’ve acquired in recent months, as cultural clashes and personality mismatches prove challenging to navigate.
Penn Entertainment’s purchase of Barstool Sports came to an abrupt end last month, after a series of incidents that pitted the media company’s brash hosts against the highly regulated industry Penn operates within. At Stripe, IndieHackers was bought back by its founders earlier this year, citing a desire for independence. And at Robinhood, the Snacks podcast was reclaimed by its founders who spun it out as an independent company.
Whether to build or buy has been a hot topic for a few years as more brands have sought to “own” audiences and lower customer acquisition costs using content. As Kyle Poyar, operating partner at VC firm OpenView says, buying a media company can be a relatively low-risk bet, and can be a less expensive endeavor than building something in-house. But there are also risks, specifically around cultural mismatches.
The most well-known acquisitions have focused on already popular publishers that have a demonstrated alignment with the brand’s existing product and customer base. For example, marketing software company Hubspot purchased The Hustle, while JPMorgan Chase bought The Infatuation, a restaurant review site, software company Paddle bought ProfitWell, and Mailchimp acquired British magazine Courier.
Those acquisitions are going strong. But there are a growing number of examples where freewheeling independent personalities have clashed with their corporate buyers.
Dave Portnoy bought Barstool Sports back from Penn Entertainment for $1, after paying a total of $550 million for 100% control of the company just a few months ago. Penn entered into a major deal with ESPN to rebrand Barstool Sportsbook to ESPN Bet. While a deal with Disney-owned ESPN no doubt played a major part in the decision, both companies also pointed publicly to a cultural mismatch between brash, rules-flouting Barstool and the highly regulated industry which Penn operates in.
Barstool host Ben Mintz was fired by Penn for saying a racial slur as part of a song lyric during a livestream in May. Barstool president Dave Portnoy announced the news on Twitter and, notably, added that Penn made the decision. In March, a tweet from Barstool Sportsbook showed Dan “Big Cat” Katz, a key personality at the company, hitting a table with a baseball bat, causing a social media kerfuffle
In a video announcing the decision, Portnoy said ultimately, Barstool and a regulated industry simply didn’t jive. “We got denied [gambling] licenses because of me,” Portnoy said. “So the regulated industry [is] probably not the best place for Barstool Sports and the type of content we make.”
“Being part of a publicly held, highly regulated, licensed gaming company, it became clear that we were an unnatural owner” for Barstool Sports, CEO Jay Snowden said on Penn’s second-quarter 2023 earnings call. Snowden said Portnoy’s “emergency press conference” video “summed it up really well.”
In April, exactly six years after buying the publisher, Stripe parted ways with IndieHackers. IH is a content site and community for founders and entrepreneurs, with lively forums, a podcast and other content. Stripe bought it because of the obvious alignment between Stripe’s own resources for founders, which it could sell to IH’s audience.
But founders Courtland and Channing Allen soon found that they preferred running an independent company. Discussing the divestment, the duo said that they began to feel like they were no longer earning their paychecks. The publisher had big goals set out for performance, which they often didn’t hit, which made them feel like they were “letting down [their] dad.” Despite tepid growth, paychecks kept coming, which they said impacted their motivation.
Another example is Robinhood’s Snacks podcast. In 2018, Robinhood acquired publisher MarketSnacks, rebranding the newsletter and podcast. For three years, Nick Martell and Jack Kramer ran the Snacks media arm, growing the podcast to more than 40 million downloads in 2021. After Robinhood IPO’d, the duo spun off the podcast and renamed it.
“We’re entrepreneurs who sold our company, and we wanted to get back to entrepreneurship,” said Kramer, speaking on an episode of the Colin & Samir Show a few months ago. Spinning out into an independent company has also allowed them to do more projects like a regular Instagram Live, for example, which is hard to do at a regulated company like Robinhood. As an independent podcast, it gets more freedom to be more “editorial.”
Alexis Grant, founder of TheyGotAcquired.com, a publication that covers acquisitions, says that when it comes to brands that buy media companies, culture fit can be a critical, make-or-break factor. Often it can be difficult for the sellers to adjust, she added: “No matter how much a seller aligns with a buyer, the buyer will never run the business exactly the way the seller had — and that can be a tough pill to swallow.”
For brand publishers, acquisitions still remain a viable route to building an audience. If brands can find appropriate targets that are additive to the business, acquisition can speed up the difficult work of audience-building, and often can help solve immediate problems. But media is often about people, which can also mean that brands will need to be thoughtful about selecting the right acquisition targets – and be willing to part ways if things don’t work out.