Condé Nast owners set to reap $1.4 billion windfall from Reddit

The Internet has not been kind to Condé Nast, the publisher of star-studded magazines like Vogue and Vanity Fair, whose fortunes and influence have declined in the digital age.

But if the Web takes, it also gives.

The Newhouse family, the media dynasty that controls Condé Nast through its holding company Advance Publications, is expected to reap a windfall of about $1.4 billion on Thursday when the social site Reddit goes public. listed on the New York Stock Exchange. Condé Nast acquired Reddit for just $10 million in 2006.

With its anarchic culture of amateur commenters, Reddit is a far cry from the meticulously curated guides to the high life of the Condé Nast stable. But its public offering will reward an early and prescient bet on the company by the Newhouses, who own about a third of the outstanding shares.

Advance, which also has major stakes in Charter Communications and Warner Bros. Discovery, among other investments, is privately held and its finances are closely monitored. It's unclear whether Condé Nast itself would benefit from Reddit's stock value; representatives declined to comment. Charter and Warner Bros. have experienced significant declines in their stock prices over the past year.

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

Condé Nast, like many other media outlets, recently announced a round of layoffs, and more cuts are expected after the company resolves its dispute with its union. In January, the company moved Pitchfork, the hipster music magazine, under the auspices of GQ. Chief executive Roger Lynch said this month that revenue in 2023 was unchanged from the previous year, partly because of a tough advertising market.

Advance created Reddit in 2011, and later one of the site's founders, Alexis Ohanian. credited the Newhouses for providing Reddit with “a ridiculous level of autonomy.”

In some sense, the Newhouses' potential windfall is consistent with a business strategy established by the family's patriarch, Samuel I. Newhouse, a veritable Horatio Alger who rose from poverty to create one of the world's leading media dynasties. the richest in the country. Newhouse, who founded Advance in 1922, was an early distressed asset specialist, buying up struggling newspapers at discount prices and turning them into profit generators.

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

Robert A. Sauerberg Jr., a former Condé Nast chief executive who remains on Reddit's board, also owns nearly 50,000 shares of the tech company, according to public filings. His stake would potentially be worth $1.6 million below the $34 per share price target.

Katie Robertson reports contributed.

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