Forbes CEO Mike Federle joins Yahoo Finance Live to discuss the company's $200 million investment deal with cryptocurrency exchange Binance, digital publishing, the outlook for the media industry, and the company's SPAC plans.
BRIAN SOZZI: Forbes has secured a $200 million investment from crypto platform Binance. The investment comes as Forbes eyes public markets in the first quarter via a SPAC transaction. Joining us now is Forbes CEO Mike Federle. Mike, good to see you again here.
Big transaction for Forbes. Why are you making this deal?
MIKE FEDERLE: Yeah, well, good to see you too, Brian. Well, it's part of our belief. You know, Forbes from the beginning has always been about giving people the knowledge, the resource, the inspiration the connections they need to achieve success. And what's going on with digital assets, I call it beyond crypto, with crypto, NFTs, blockchain technologies, the metaverse coming on.
We want very much to be the guide to-- or the bridge to understanding as this comes on and starts to make even bigger impacts on society and business.
JULIE HYMAN: Hey, Mike. It's Julie here. I think it's undeniable, right, the interest that we are seeing in crypto broadly in society. We've certainly talked about it a lot. I have to ask, though, about the deformation lawsuit from Binance against Forbes a couple of years ago after you guys published some stories that were critical of the company. So how do you go from that to then this business relationship and how have you guys sort of addressed that directly?
MIKE FEDERLE: Yeah. So they withdrew that lawsuit rather quickly, I think recognized the error of it. But going forward, it was a great demonstration of the importance of editorial independence.
And that is a cornerstone of Forbes' brand. And any investor coming into making an investment in Forbes knows that impinging upon that editorial-- the journalism or crossing that line is going to be a negative effect on their investment.
So in some ways, it's actually strengthened an understanding of media from Binance and from the industry. But more than that, I think, again, we're going to continue to write stories that are pro and con from different points of view based on what we believe. So in the end, I think that was actually a sign of strength going forward.
JULIE HYMAN: And certainly, there are a lot of various journalistic institutions that are owned by stakeholders who would have an interest in pushing coverage one way or the other. So to your point about journalistic independence, talk to me about the firewalls or what is sort of written into this deal to ensure that you guys are going to retain that independence?
MIKE FEDERLE: Well, you know, I've gone through a lot of large investors, mergers, acquisitions, over my career. And there have been various ways to deal with kind of creating defenses on the wall.
I actually don't think any of those are necessary myself, in that it's a black and white situation and very clear as to editorial independence is the cornerstone of the value of the brand. And anyone coming into that, anyone, again, making that investment or anyone looking at acquisitions has to recognize that doing anything to damage that or to try to influence that negatively is going to be a negative effect on their investment.
So for me, it's a simple problem or a simple thing that doesn't really exist. We know it's not going to happen on my watch. It's not going to happen on Randall Lane or managing editor's watch. And it hasn't happened for 104 years. So we feel confident that there's no problem there.
BRIAN SOZZI: Mike, how do you plan to use this money?
MIKE FEDERLE: Well, the money is part of the overall DSPAC and the SPAC process. So what we did-- we've already used it, I should say, in the sense of we've traded out-- when we first went out to raise the pipe on the SPAC, we had a target of about $175 million. And it was so oversubscribed, we capped it out at $400 million.
What this investment does is allow us to actually take out some of the institutional investors in the original $400 million, strengthening it with the $200 million from a very strategic investor. That's how we look at Binance as a very much strategic investor in achieving that kind of bridge I was talking about in terms of understanding and demystifying crypto and digital assets.
BRIAN SOZZI: Lastly, Mike, too, there was-- it's my understanding that a competing firm, GSV, has stepped up here with an offer of pretty close to the valuation of the company, $620 million. Have you heard from them recently and do you still see yourself being a public company in the first quarter?
MIKE FEDERLE: Yeah, we're very much on track as a public company. I know the GSV guys very well. They're all friends. And it's all part of-- Forbes has had many, many different people, companies from around the world and interest from around the world about investing in Forbes, buying Forbes outright.
We've chosen to go public via SPAC in that it leaves us with the most cash to do the things that we want to do, to really grow the enterprise, as we say, from-- to grow our business, which is relatively small compared to the giant outsized brand that is Forbes.
So it leaves us with cash to do that, as well as no debt in the deal. So we chose this route, and we're on track to close the deal by the end of the first quarter.
JULIE HYMAN: Mike, as you know, the SPAC environment has gotten tougher. And the other well-known media company that's recently come public through a SPAC is BuzzFeed. We see the stock chart there. It has not been a pretty story there in terms of how it's reacted.
Now, in terms of the SPAC that you guys are merging with, which is Magnum Opus, it's trading a little under $10. I'm just curious like given that environment, how you're thinking about when you guys are going public, you know, whether you need to brace yourself a little bit for that public market life.
MIKE FEDERLE: Well, there's no doubt I have to brace myself for public market life. And you know, and SPACs, yes, I mean it's no mystery that SPAC's been going-- people have been questioning SPACs. But I will tell you, we have some really strong indicators that we're very different than BuzzFeed.
And you just need to look at both the underlying financials, which can all be found in the proxy statement, as well as our restatement of forecasts that we did in the third quarter. We are a very solid business right now, significant revenue growth in the top line and big-- you know, EBITDA growth on the bottom line.
So we're already delivering a very good business. And the possibilities of growth in there, a lot of investors have seen. And now adding Binance as well, I think is a big boost and a good indicator of that is-- you know, in our analyst day next week, we've got over 30 analysts signed up, which is a really terrific number for a micro-cap coming out in the market for the first time.
So there's a lot of momentum, a lot of buzz around it. And you know, the markets will be the markets in the end. And we'll work with those as we see where the stock goes.
BRIAN SOZZI: Well, good luck at that analyst day. We await your first day of public company life. Forbes CEO Mike Federle. Good to see you as always.