Mic Drop #45: A Dotdash Future for Chip & Joanna Gaines?

The Magnolia brand is surprisingly positioned to A/B test its DTC future through *both* IAC's acquisition of Meredith Corp. & the Warner Bros. Discovery merger

Last night Jeffrey Trachtenberg of The Wall Street Journal reported:

IAC/InterActiveCorp. is in advanced talks to acquire magazine publisher Meredith Corp., owner of brands including People and Better Homes & Gardens, according to people familiar with the situation, in an effort to build more scale in online publishing.

The deal, which is expected to be valued at more than $2.5 billion, would vastly expand IAC’s collection of online publications, which include Brides, Serious Eats and TripSavvy, the people said.

The piece concluded with this important detail:

The Meredith titles that IAC would acquire—which also include Real Simple, Allrecipes and InStyle—would become part of Dotdash, IAC’s publishing division, one of the people said. Formerly known as About.com, Dotdash controls 14 websites that collectively reach over 100 million people each month, according to IAC’s website.

One notable Meredith magazine title that Dotdash will control?

Magnolia Journal, a lifestyle publication launched in 2016 with home-renovation celebrities Chip and Joanna Gaines, who also have a deal with Discovery for the Magnolia Network.

Magnolia Network launched two months ago, is a cornerstone of discovery+, and I wrote about it in Mic Drop #37: discovery+ vs. Creator Economy.

A Fascinating “A/B Test” Emerges

The likely IAC acquisition of Meredith will result in an A/B marketplace “test” of Magnolia’s brand in the DTC space in 2022:

  • A. Magnolia content on discovery+, Magnolia.com, and/or HBO Max (after Warner Bros. Discovery closes)

  • B. Magnolia content on Dotdash published with data-driven decision-making, evergreen articles, and, engaging and converting users via algorithmic targeting (after IAC-Meredith deal closes).

The “test” will reflect dynamics from three pieces I wrote over the summer:

In the discovery+ piece, I wondered:

if Zaslav’s B2B-first approach has underestimated the connection of the audience to the Gaineses in a marketplace where near-frictionless relationships with content creators are growing in importance?

Meaning, Zaslav and his team have prioritized third-party bundles with Amazon, Apple, Verizon and other partners to ensure discovery+ distribution.

Those bundles create friction between Discovery, the Gaineses and their consumers because the partners effectively control that relationship, even if they may do a better job in driving scale than Discovery can do on its own.

In Member Mailing #262 and Member Mailing #272, I laid out how key parameters of the Dotdash model reflect the very opposite of the friction found in Discovery’s rollout of discovery+ and Magnolia Network:

  1. Taking big risks with the backing of a well-funded owner (Dotdash with IAC);

  2. Launching with a different look and feel than competitors with fewer ads for users;

  3. Being open to turning away advertisers to make less money and optimize the user experience in the short-term;

  4. Building out a sophisticated use of data-driven decision-making (Dotdash with search data);

  5. Focusing on surfacing evergreen library (Dotdash with evergreen About.com articles); and,

  6. Engaging and converting users via algorithmic targeting (Dotdash converting off-platform via search engine optimization).

All this points to the Gaineses being in a fascinating position in 2022 to witness and profit from a DTC test of their brand:

  • A. Discovery/Warner Bros. Discovery will be building out the Magnolia brand via DTC streaming with a DTC strategy built around friction between the Gaineses and their online consumers; and,

  • B. Dotdash will be building out the Magnolia Journal brand with a DTC strategy focused on eliminating friction between the Gaineses and their online consumers.

Actually, not just a fascinating position… a great position to evolve their nascent “creator economy” DTC business model.

But, there’s a twist!

In Member Mailing #262 I wrote about how an interview with WarnerMedia’s EVP & GM for Direct-to-Consumer Andy Forssell about HBO Max read a lot like how IAC executives describe DotDash’s model.

In other words, depending on how the politics of the Warner Bros. Discovery merger play out, Forssell will likely be overseeing Magnolia Network content and possibly also discovery+ and the Magnolia app.

That means, after the Warner Bros. Discovery merger closes, the Dotdash model may win out for Magnolia at both IAC and at Warner Bros. Discovery.

The Gaineses could end up with better DTC models than pre-merger because Dotdash’s model will be both driving their Magnolia Journal model, and underlying the growth of their Magnolia Network model.

Of completely unlikely, out-of-left-field outcomes to emerge from four completely different companies (Meredith, IAC, Discovery, WarnerMedia), this may take the cake.