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Wall Street Journal: Great Hill Partners Agrees to Acquire Gizmodo Media Group

Apr 8, 2019

Private- equity firm will add several websites to its portfolio, including Gizmodo, Lifehacker, Deadspin and The Onion

By: Benjamin Mullin

Private-equity firm Great Hill Partners has agreed to acquire Gizmodo Media Group from Univision Communications Inc., the companies said, ending the Spanish-language broadcaster’s foray into English-language digital media.

James Spanfeller, the former chief executive of and president of consumer magazines at digital publisher Ziff Davis, will become chief executive of G/O Media Inc., a new company created from the assets. Gizmodo Media Group includes sites Gizmodo, The Onion, Jezebel, Deadspin and Lifehacker.

The companies didn’t disclose the deal’s price. People familiar with the sale process said they expect Great Hill Partners to pay much less than the $135 million Univision paid in 2016 to acquire most of the Gizmodo properties.

The Wall Street Journal reported in February that Great Hill Partners and Univision were in exclusive talks over Gizmodo Media Group.

Digital-media companies have struggled to accelerate their revenue growth, as they battle with tech giants like Alphabet Inc.’s Google, Facebook Inc. and Inc. for digital advertising dollars.

Mic Network, which had raised more than $60 million in venture funding over several years, sold to Bustle Digital Group last year for about $5 million. Mashable, which was once valued at $250 million, sold to Ziff Davis for around $50 million in 2017.

In 2017, the Gizmodo Media Group sites—which were part of a larger Univision unit called Fusion Media Group—generated more than $80 million in revenue, according to a document reviewed by the Journal, but still lost about $20 million. Univision took an impairment charge on Gizmodo Media Group of more than $120 million in 2018, The Wall Street Journal reported in February.

Mr. Spanfeller sees promise in the assets, which have a vast online audience, according to a person familiar with his thinking. About 67 million people visited the group’s websites in February, according to Comscore.

“G/O Media is already the leader among digital media companies speaking to the 18-to-34 year-old market, and we are confident and excited to see that lead expand,” Mr. Spanfeller said in a statement.

Mr. Spanfeller will be an investor in the company, according to a release from Great Hill Partners. The new name is derived from Gizmodo, the company’s flagship tech site, and The Onion, its satirical news brand.

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.

Mr. Spanfeller has extensive experience in digital media. Previously, he was chairman of the Interactive Advertising Bureau, an online advertising trade body, and a longtime board member of Digital Content Next, a trade organization that represents digital publishers. He later founded Spanfeller Media Group, a media company that owned the websites The Daily Meal and The Active Times before being bought by Tronc, now Tribune Publishing Co.

G/O Media plans to honor a collective bargaining agreement that was recently struck by the Writers Guild of America, East, the person said.

Univision acquired many of the Gizmodo Media Group sites in a 2016 bankruptcy auction, part of its broader strategy to become a major player in English-language digital media.

Since his appointment in June, Univision Chief Executive Vincent Sadusky has honed the company’s focus on Spanish-language media. Mr. Sadusky is planning to invest in the company’s local and national news operations to improve the company’s profitability.

“Today’s announcement is the culmination of a very thorough process, as part of Univision’s broader strategic realignment and return to its core strengths in Hispanic media and marketing,” Mr. Sadusky said in a statement.

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.

Source: WSJ

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