The Newhouse family has watched one billionaire clan after another surpass its wealth as its multigenerational 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 $2.1 billion after shares surged 48% in its trading debut Thursday. After additional investments in the company calculated to be in the tens of millions, the family notched a more than 5,800% return, according to the Bloomberg Billionaires Index. That makes 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 CEO 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.
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The Reddit bet marks a rare highlight for the Newhouses, who got their start in newspapers and own Conde Nast, publisher of magazines including Vanity Fair, the New Yorker and Vogue 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 sixth- and third-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 8.1% of Warner Bros Discovery, the entertainment behemoth created when AT&T Inc. sold Warner Bros. to Discovery in a debt-fueled takeover in 2022. Shares are down 66% since the merger, and ad revenue 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 U.S., 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 ending 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 Staten Island Advance in 1922 after helping to turn around New Jersey’s Bayonne Times. 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 Star-Ledger 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.