Discovery Communications has entered a deal with venture capitalist and Thrillist Media chief executive officer Ben Lerer in his new media holding company called Group Nine Media.
Part of the deal includes a $100 million investment in the newly formed company, which includes Thrillist Media Group, Now This Media, The Dodo and Discovery’s digital network, Seeker and its production studio SourceFed. Axel Springer will maintain its investment as the second-largest shareholder in the company. Lerer will take the role of ceo of Group Nine.
Last September, Lerer received a $54 million investment in his firm, which included Thrillist and e-commerce site JackThreads. He decided to split the company into two entities. He did not disclose how the $54 million was divided, but noted that Axel invested in Thrillist and that Oak Investment Partners and SBNY invested in the men’s commerce site.
Lerer, who said the Discovery deal got signed at 2 a.m. on Thursday morning, told WWD that the “real reason for this has to do first and foremost about trends in the market and where things are moving.”
“I think there’s going to be a meaningful consolidation in the media space,” he said, citing similar “roll-ups” in media such as Univision’s buying spree of Gawker Media, The Onion, The Root and the remaining stake of Fusion, or Hearst and Verizon’s acquisition of Complex Media, among others.
While Lerer acknowledged the logistical and operational challenges of the new partnership, he also noted that the landscape is becoming increasingly difficult as a smaller digital firm today.
“This is not going to be easy,” he said. “But you know what else isn’t easy? Being an independent digital media company.”
“Each of our brands has found great success independently, but with consolidation of digital content companies around the corner there is extraordinary value in all existing under one multibrand roof,” Lerer explained. “We will be stronger brands working together — we will have more influence; we will have better data and insights; we will be better partners to our advertisers, and, most importantly, we will be substantial enough to make a real difference and stay ahead of the market.”
“Today marks the start of a strong new company with tremendous brands, reach and scale,” said David Zaslav, president and ceo of Discovery Communications. “The merger of these assets will bring together best-in-class management, led by Ben and his team, expertise in data analytics technology and global reach to create one of the world’s largest digital-first content companies attracting young, passionate enthusiasts that advertisers want to reach.”
Building scale is a common practice in media today. The partnership between Discovery and Group Nine Media will include a commercial agreement that will enable advertisers to reach their desired audience via 360-degree opportunities across multiple platforms including linear, digital, social and live events, the company said.
Group Nine Media will expand Discovery’s push into the digital network space targeting Millennials, which, according to the firm, began with the 2012 acquisition of digital network Revision3 and the subsequent acquisition in 2013 of Philip DeFranco’s portfolio of online video channels and ventures, DeFranco Creative. It renamed those Seeker and SourceFed Studios.
In the future, Discovery will have an option to buy a controlling stake in Group Nine Media. Axel Spring will have a seat on the board of Group Nine.
LionTree Advisors acted as exclusive financial adviser and Cooley LLP acted as legal adviser to Group Nine on the transaction. Proskauer Rose LLP acted as legal adviser to Discovery. The deal is expected to close in the fourth quarter.
Each media brand will remain editorially independent, but at the corporate level there will be shared services. Thrillist’s sales team and content studio, The CoLab, will combine with NowThis Studios, The Dodo and Seeker’s branded content team to create a core advertising solutions group across all Group Nine Media brands. Group Nine will also combine technology capabilities (Thrillist’s Pinnacle and NowThis’ Switchboard) to create a publishing platform for all brands. A centralized video department will be developed and will be responsible for creating OTT/on-demand and linear TV programming across all properties.