Newhouse Billionaires’ 3,700% Reddit Gain Helps Ease Media Woes

(Bloomberg) -- The Newhouse family has watched one billionaire clan after another surpass its wealth as its multi-generational media business sputtered. Its $26 billion fortune from a decade ago has barely grown, save for one key wager: Reddit Inc..The Newhouses’ $10 million initial investment in the nascent social-media company in 2006 is now worth more than $1.4 billion as it begins trading Thursday. After additional investments in the company calculated to be in the tens of millions, the family notched a more than 3,700% return, according to the Bloomberg Billionaires Index, making them the biggest beneficiaries of one of the year’s most anticipated initial public offerings..The family acquired Reddit just a year after the company’s 2005 founding. It had come out of the Y Combinator startup program and had just four employees at the time, including current Chief Executive Officer Steve Huffman. The Newhouses opened the business up to new investors in 2011 and they now own 27% of the company following the share offering. .Read More: Reddit IPO Prices at Top of Range to Raise $748 Million.The Reddit bet marks a rare highlight for the Newhouses, who got their start in newspapers and own Conde Nast, publisher of magazines including the and through Advance Publications. .Their biggest bets, though, are on paid television and cable, with stakes in publicly traded Warner Bros Discovery Inc. and Charter Communications Inc. — the eighth- and fourth-worst performing stocks, respectively, in the S&P 500 Index this year..Representatives of Advance didn’t respond to requests for comment. .Media Disruption.Few parts of the family’s empire have been spared from the widespread disruption in traditional media, including declining ad revenue and competition from streaming and social media. Warner and Charter, for example, are suffering from the long-term decline in pay TV, where subscriptions peaked in 2015. .The Newhouses own an 8.1% stake in Warner Bros Discovery, the entertainment behemoth created when AT&T Inc. sold Warner Brothers to Discovery in a debt-fueled takeover in 2022. Shares are down 65% since the merger and ad revenues declined by 14% last year. Streaming profits aren’t replacing those being lost from linear television fast enough. And the problems go beyond TV, with the company’s DC Studios group being retooled after a series of high-profile superhero movie flops. .Shares hit an all-time low in February after disappointing quarterly results. The lack of earnings guidance “didn’t give investors a lot of confidence,” said Bloomberg Intelligence analyst Kevin Near, who added that the company’s more than $40 billion debt pile is “a big issue.” .The Newhouses also own 13% of Charter, the biggest pay-TV provider in the US, which has been hit by cord-cutting too. While Charter has been somewhat insulated by its broadband internet business, which has been growing and is more profitable, that may be coming to an end as the pandemic-era subscriber boom reverses, Near said. .The outlook is even gloomier within the family’s print-media business. .Newspapers are where the Newhouses first came to prominence. Samuel Irving Newhouse Sr. bought the in 1922 after helping to turn around New Jersey’s . His sons joined the business, with Si overseeing the growth of its high-profile magazine division and Donald managing newspapers. .Since 2013, circulation has declined about 10% across eight prominent Conde Nast magazines tracked by the Alliance for Audited Media, and more subscriptions have moved online, which typically isn’t as profitable as print. Reddit has subleased space at One World Trade Center in New York, Conde Nast’s headquarters, as the publisher’s footprint shrinks. .The Newhouses also own newspapers like New Jersey’s and local news websites, some of which replaced print editions shuttered in recent years. .Si passed away in 2017 and Donald is now 94. Steven Newhouse, a member of the third generation, sits on Reddit’s board and might appreciate the distraction of the company’s public debut. He’s also on the board of Warner. .More stories like this are available on bloomberg.com.©2024 Bloomberg L.P.

Newhouse Billionaires’ 3,700% Reddit Gain Helps Ease Media Woes

The Newhouse family has watched one billionaire clan after another surpass its wealth as its multi-generational media business sputtered. Its $26 billion fortune from a decade ago has barely grown, save for one key wager: Reddit Inc.

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