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April 8, 2019, 1:28 p.m.
Business Models

Gizmodo Media Group is sold to a private equity firm, and Univision is out of the English-language website business

The plan is “targeting marketers who are seeking brand-safe content and high-quality audiences that are difficult to find elsewhere.”

It seems depressingly predestined, or at least depressingly 2019: One of the web’s original publishing upstarts — a controversial but highly influential company that brought bloggy energy to digital media, valued not long ago at a quarter-billion dollars — is now in the hands of a private equity firm that bought it for the spare change in its (very nice) couch cushions.

The Wall Street Journal’s Benjamin Mullin first reported that Univision is selling Gizmodo Media Group to private equity firm Great Hill Partners — which is creating a new company called G/O Media with the assets and putting Jim Spanfeller, former executive at and Ziff Davis (with some Tronc crossover), in charge. The price was not disclosed, though Peter Kafka hears it was less than $50 million.

The deal encompasses a lot of properties with a variety of histories. There are the sites that were originally a part of Gawker Media (R.I.P.): Gizmodo, Jezebel, Deadspin, Lifehacker, Jalopnik, Kotaku, and io9. Univision purchased those for $135 million except for in 2016, then Gawker shut down. (Something called “Gawker” may return soon.) Univision had separately acquired a controlling stake in The Onion earlier that year. There’s also The Root, which Univision acquired in 2015, and two sites that Univision had launched on its own: Splinter (née Fusion) and Earther. Per Variety, “a Univision rep said that all employees of GMG and The Onion will be joining G/O Media,” and it’s unclear if there will be layoffs. (Usually, there are layoffs.)

Private equity firms don’t exactly have the greatest track record for keeping media organizations alive and well. Spanfeller, the incoming chief executive of G/O, comes from digital publisher Ziff Davis, which purchased Mashable in a 2017 fire sale. The company promptly laid off 50 people — after being outbid by Univision for Gizmodo Media Group.

Here’s what Great Hill managing partner Chris Gaffney, who has served on Ziff Davis’ board, had to say: “From our experience across the digital media landscape, we know it is not every day that an attractive suite of digital media assets becomes available with strong brand recognition among consumers and advertisers, and a set of engaged, vertical audiences which together are larger than Vox, BuzzFeed or Vice. We are excited by growth and see a great opportunity to further scale a high-quality content producer led by an experienced digital media executive like Jim.”

Great Hill doesn’t own a lot of media companies; the only company listed in the “media” section of its portfolio doesn’t really fit the definition. It says it typically holds companies for 3 to 7 years before an exit of some sort.

Gizmodo Media Group was supposed to be Univision’s foray into English-language media. Raju Narisetti, the group’s CEO from fall 2016 until he left almost exactly a year ago post-failed IPO, spoke to us about GMG’s vision (as part of Fusion Media Group at Univision) in 2017:

If we don’t leverage the very strong parent company, then we’re doing a disservice. Think of it this way. The BuzzFeeds, the Voxes, Vices of the world — they’re all trying to get into television by partnering with NBC and others. We have the advantage now of just having a strong TV company from the beginning. I absolutely want us to leverage that….

A lot of our challenge will be simply execution. We want to be able to prove that all of our brands can stick together. There’s a big distinction in my mind between a house of brands, and a branded house. We’re a branded house, in the sense that there are a lot of synergies between our brand and our audience and the way we sell them.

Gizmodo Media Group’s sites generated more than $80 million in revenue in 2017, Mullin reported at the Journal, but lost $20 million. Spanfeller, also an investor in G/O Media Inc., thinks he can turn that around:

Mr. Spanfeller hopes to bolster the company’s profit margins from automated or “programmatic” advertising sales, targeting marketers who are seeking brand-safe content and high-quality audiences that are difficult to find elsewhere, the person said.

He will also seek to diversify the company’s business by further developing its e-commerce efforts and offering some premium paid content, the person said….

Univision is still grappling with debt, the consequence of a $13.7 billion leveraged buyout in 2006 when buyout firms took the company private. The company said it finished 2018 with $7.4 billion in debt but reduced its total debt by $547 million last year.

“Brand-safe content” can mean a lot of things, but it has not always been one of these sites’ core strengths.

The new company will honor a collective bargaining agreement with GMG’s union, according to Mullin.

POSTED     April 8, 2019, 1:28 p.m.
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