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Forbes CEO on going public: Soon our business will be as big as our brand

Forbes CEO Michael Federle joins Yahoo Finance Live to discuss the company going public via SPAC and outlook for growth for the business publication.

Video Transcript

BRIAN SOZZI: Storied business publication "Forbes" recently disclosed plans to go public on the New York Stock Exchange. The 104-year-old publisher will merge with a SPAC called Magnum Opus, putting the company at an enterprise value of $685 million. While you may know "Forbes" for its glossy magazine, of course, they are known for many other things, such as newsletters and the 30 under 30 list.

Let's welcome in Forbes CEO Mike Federly, to talk a little more about the company's debut. Mike, good to see you this morning here. So what's the pitch to investors?

MIKE FEDERLE: Yeah, thanks guys for having me on. Good to see you too. The pitch for investors was pretty simple. It's a strategy of what we call closing the gap, and that's the gap between our enterprise value and this much bigger brand value that we have. And the way we're going to do this is through consumer conversion, in terms of converting this very large digital audience that we have built, into segmented audiences that we can then sell very specific subscriptions and memberships and products to.

BRIAN SOZZI: Mike, why do you think that gap exists? Because that was an interesting note you put in the investor presentation. The gap between the brand value of "Forbes", which has been around for some time, and the enterprise value. Why do you think that exists?

MIKE FEDERLE: Yeah, well Forbes, I've worked on dozens of brands in my career and Forbes is really a remarkable brand. Very unique in its brand elasticity. It has potential to reach and really make an impact in audiences across a lot of different categories. If you were to ask 100 readers of "Forbes" what it means to them, you might get wealth, power, business, investing, rich, luxury, all these different terms. But it really distills down to success and the world is success. And wherever there's an emerging business class around the world, there's an opportunity for Forbes to go in. And we've done just that with about 40 licenses around the world. And so as a result, our brand has this really gigantic outsized value to it that now our goal is to make the business to be as big as the brand.

- Hey Mike, it's Julie here. I believe you guys put your content relatively recently behind a paywall. Can you talk to us about that decision and how many paid subscriptions you have and how much you expect that to drive revenue?

MIKE FEDERLE: Yeah. We actually, we experimented with a very limited metered paywall. And this strategy I should say right up front, is not a hard paywall strategy. We are big believers in the ad market. The ad model is going to continue to grow. And as we add data and analytics, our first party data platform, we're able to increase the value of that advertising. So we're bullish on advertising going on.

But what we're doing is not a hard paywall, but creating these premium products and experiences. And this is going to be driven by, again, the data and analytics that we're able to produce as we begin to segment our audiences. And we've already begun to do this and we've already begun to see good results on it.

In terms of your question a number of-- we have tens of thousands of subscribers, but that's really on this limited paywall. And that's really, again, was more of an experiment to see how we could begin to segment certain sectors of our audience and create that subscription revenue from an old model subscription of just a paywall.

- Gotcha. And speaking of old model of subscription, we were just showing the stats that you guys have half a million paid print subscribers, which in this day and age is an impressive number. Do you expect that number to stay where it is, considering we're sort of seeing the secular decline of that kind of a business?

MIKE FEDERLE: No. It's interesting, as you talked to people around the world, again, a testament to the brand, is people will often refer to us as a magazine company still, and that's great. The magazine remains an important component to our mix, but it's only about 10% of the revenue. So we're 90%-- we've made this digital transformation. We have created this digital media and information company at scale and now we're at an inflection point. We're ready to go to the next step, which is really to develop a very specific audience cohorts and customize our product and experiences to those audience cohorts based on what we know about them.

As far as print goes, I don't see that changing a whole lot. We have been very smart and un-nostalgic about right sizing that business. So that 500,000 is down from probably a peak of 900,000 or so. But there remain a lot of interesting people, or people interested in receiving the magazine and our information in that format.

BRIAN SOZZI: Mike, I don't have to tell you this. There's been a lot of consolidation in the industry of late. You have Politico, you have the Qataris being kicked on Axios. Once you are public, do you view your platform is as an acquirer?

MIKE FEDERLE: Yeah, certainly we'll be looking at that. What we have, our promised to investors and to the Street, is this consumer conversion strategy. Again, we already have the very top end of the funnel that is very large, 150 million audience across Forbes' ecosystem. And so the investment thesis is more about making that conversion and having this additive new revenue stream on top of the very successful ad model that we have.

But going forward, I mean, we're well positioned in a consolidating marketplace to take advantage of opportunities as they come up, and we will do that as well and there are always there always opportunities out there.

BRIAN SOZZI: I'll certainly look forward to covering and following your public company journey. Forbes CEO, Mike Federle. Good to see you. Have a great weekend.

MIKE FEDERLE: Thanks, Brian. Thanks, Julie.