In an effort to court millennials and invest further in key content categories, The E.W. Scripps Co. has acquired the iconic humor brand Cracked from Demand Media. The purchase price was $39 million.
"We always look for brands that have an eye toward high quality," said Scripps Chief Digital Officer Adam Symson. "So Cracked really fit the bill for us."
Cracked magazine launched in 1958 as a competitor to Mad magazine. Since dropping a print edition in 2007, the brand has been a digital-only destination for all things pop culture, weird and funny.
Demand Media CEO Sean Moriarty said Scripps "reached out to us" about potentially acquiring Cracked. "The more we had conversations with Scripps, the more both parties agreed that it made sense to explore a transaction ...," he said.
As for the timeline of the transaction, Mr. Moriarty said "things moved pretty quickly over the course of a few months."
Mr. Symson said the "Cracked digital brand is really strong," and pointed to two metrics -- time spent (8 minutes, on average) and direct traffic (50%) -- that illustrate the loyalty of the magazine's audience. Cracked.com brought in just over 8 million U.S. multiplatform uniques in February, a 12% year-over-year increase, according to ComScore.
Cracked "absolutely has that authentic voice" that millennials value, Mr. Symson said.
The plan, Mr. Symson said, is to accelerate Cracked's development of video and audio content that can be consumed through over-the-top services, which is in line with how Scripps is generally operating in the digital space. The company merged its newspaper assets with Journal Communications last year, forming Journal Media Group, and, in addition to Cracked, Scripps includes digital media startups like Midroll (podcasting) and Newsy (news video), both recent acquisitions.
Cracked already produces 10 digital video shows, and Mr. Symson said the company's low-hanging fruit is the "large on-demand opportunity" presented by those programs.
There are no plans to bring back a print edition of Cracked, Mr. Symson said, and Scripps plans to keep Cracked's leadership team in place ("Everybody is staying on").
Cracked brought in approximately $11 million in revenue in 2015 and is profitable, according to Scripps. "We intend for this business to be in high-growth mode, and we'll support it with whatever it needs in order for it to be a contender for a large audience and a large payback down the road," Mr. Symson said, when asked how the company would be run.
On the advertising side, Mr. Symson said Cracked is taking advantage of the industry-wide shift from traditional display advertising to branded and native content. "Cracked is very much focused on fishing where the fish are," he said.
For Demand Media, which also operates digital properties Livestrong.com (health and nutrition) and eHow (DIY), among others, Cracked proved to be a wise investment. Demand purchased Cracked in 2007 for less than $1 million.