LBG Media, the UK listed owner of the self-described “global leader in youth publishing” LADbible Group, has acquired the New York-based Betches Media LLC for upfront cash of $24mn (£19.7mn) and contingent payments up to a maximum $30mn on a three-year earnout to 2026. The likely total price is expected to be 9x EBITDA in 2024.
The 12-year-old Betches was owned by its three female founders who will all remain with the business, at least until 2026. Betches has 32mn, largely female followers and generated $14.6mn of revenue and $3.9mn EBITDA in 2022. Revenue was 44% ahead of 2021.
Investors note that the acquisition marks a step-change in the LBG business because of Betches’ focus on millennial and Gen Z women in the US. Brokers estimated that, largely as a result of Betches, LBG revenue and profits will increase by about 30% in 2024. LBG already claims a audience of 100mnn in th US. The deal follows the successful US acquisition of UNILAD in 2018 and insiders predicted further US investments in the next 1-2 years by LBG which has a current enterprise value of £170mn.
LBG/ LADbible was launched 11 years ago in Manchester, England by two schoolfriends, Alexander “Solly” Solomou and Arian Kalantari. CEO Solomonou had developed the idea while studying business at university. It started with a Facebook page and then the content, traffic and followers just exploded. Their first Facebook posting achieved over 75k readers. They were in business.
The site had been launched just a few a years before the demise of FHM, which had led British “lads” magazines all the way up to almost 2mn monthly copy sales and back again in a frenzied 15 years. LADbible seemed like a logical successor to FHM, Loaded, Maxim, Nuts and Zoo which had stamped British “blokeyness” across the world in the last years of the 20th century.
By 2014, LADbible had more than 5mn monthly uniques. Its come a long way since.
Its claimed 330mn global audience is now about one-third in each of the US and India and 10% in the UK. But it’s relatively big also in Australia and New Zealand. It claims to be the biggest publisher on Tik Tok with some 30mn followers. But its content is also all over Facebook, YouTube and Instagram.
LADbible publishes shareable clips, pictures and longer form cause-related campaigns, giving 18-34 year olds a voice “by building communities that laugh, think and act, across all social channels”. In practice, the site originally became best known for male banter, pranks, sexist jokes, and video of America’s fattest bear. Back in 2015, BuzzFeed – no less – noted that LADbible was inviting women to send-in pictures of themselves for two features, #CleavageThursday and #BumdayMonday.
But, along the way, it has grown up and won two Cannes Lions Grand Prix awards for its ground-breaking environmental campaign, Trash Isles. Last year, it weighed into the Roe v Wade abortion debate in the US and launched Sexual Abuse & Violence Week. Its grown up a lot.
Brand extensions include SPORTbible, GAMINGbible, UNILAD and the women’s site Tyla, for an audience of young adults; 40% are female. Its user-generated and publisher content is a lively, high-quality blend of Vice, BuzzFeed and much else, with a declared strategy “to give the youth generation a voice by building communities that laugh, think and act”.
The sizzle is everywhere. LBG claims to be “the largest youth publisher in the world”, with its UK audience said to comprise 64% of the country’s 18-34 year olds, a valuable demographic for advertisers which has historically been hard to reach. LBG has been wooing fund managers this past week with an investment case based on its addressable digital ad market of $21bn in the UK, Ireland, US and Australia.
LADbible has long extinguished the sexism of its original popularity but the site has drawn the ire of envious traditional media for its blurring of the lines between advertising and independent content. But then, like most other digital media outlets, content marketing is the primary source of its revenue, along with advertising andd revenue sharing arrangements.
Given its consistent profit, LADbible (and parent LBG Media) might bristle at the comparison with the disastrous BuzzFeed and Vice. After all, it was bootstrapped for most of its first decade and had a 31% EBITDA margin back in 2021. But its 2022 results this month have set investors thinking about the prospects of a company whose market cap is about 50% of its £360mn IPO in December 2021.
But LBG has been trying just too hard to make a virtue out of “a business model… balanced across our Direct advertising (45% in 2022) and Indirect (55% in 2021)”. In practice, a majority of its advertising revenue still comes courtesy of those platform audiences.
The financials also tell the story of a company which – while it has captured a growing slice of the valuable youth audience -needs restore its profit margins which were hit in 2022 by a 21% increase in staffing. There’s still work to do:
| LBG Media Plc £mn | 2024* | 2023* | 2022 | 2021 | 2020 | 2019 |
| Revenue (growth) | 90.4 | 70.3 | 62.8 | 54.5 | 30.2 | 29.0 |
| EBITDA | 24.1 | 18.9 | 15.7 | 16.8 | 5.5 | 5.8 |
| Margin | 27% | 27% | 25% | 31% | 18% | 20% |
| People | 470 | 388 | 280 | 201 | ||
| Net cash (debt) | 18.8 | 13.7 | 29.3 | 34.3 | (6.3) | (9.3) |
Revenue (which is said to be still 70% from the UK despite the genuinely global audience) has almost trebled in the past five years grown but much of the growth has been outstripped by cost increases. In 2022, the 15% revenue increase was swallowed up by the rising cost of sales (+47%), overheads (+30%) and payroll (+16%)
LBG effectively spent an additional £9.5mn in 2022 “just” to get the extra £9.4mn of revenue. Even with revenue doubled in the past two years, profits are falling along with revenue per head.
Solly Solomonou is in full flow: “LBG is well positioned to capitalise on the fast-growing digital media market. We have a diverse range of brands catering to the hard to reach 18–34-year-old demographic, have expanded our capabilities, with our survey platform LADnation forming an increasingly key part of our offer, and we are taking advantage of the significant growth opportunity that the US market has to offer.”
The audience numbers show LADbible is a significant youth brand, especially in the UK, US, and Australia. And the 72% growth on Tik Tok is real success. This is a good media group but with, err, a business model that might belong to a previous era of digital exhuberance. The bruised backers of BuzzFeed and Vice would tell LBG that it simply cannot afford to put its faith in the social media platforms.
The simple fact is that the future of so much media depends on some degree of “ownership”: of its audience. For LADbible, that must mean getting out from under the platforms and generating most of its own audience on its own sites. It might also mean generating some “owned” revenue from readers, whether as subscriptions, membership, or eCommerce. The business model needs some work – before the company starts to make even more of the acquisitions it has been enthusiastically talking about.
LBG Media need have no cash worries – as long as it reins in its spending and overheads. It’s a golden opportunity for the bigger-than-you-think UK startup that is making 2023 the year when it finally upstages the bloated ambitions of BuzzFeed, Vice et al.
All-digital youth media can win.
