DIS Walt Disney Co

Discovery Communications Inc. has made a $100 million strategic investment into a newly formed holding company made up of digital media outlets in an effort to expand its footprint on social platforms including Facebook and SnapChat.

The new company, Group Nine Media, will be made up of the social media-oriented sites NowThis, the DoDo and Thrillist, as well as Discovery's digital network Seeker and digital production company SourceFeed Studios.

"This is an important part of our strategy. We have been seeking ways to accelerate our presence in short-form content which by its very nature works well with the newest and most influential platforms and can dovetail with our existing business," said David Zaslav, Discovery's president and chief executive.

Discovery will have an option to buy a controlling stake in Group Nine in two years, he said. German media conglomerate Axel Springer SE, which had previously invested in Thrillist and NowThis, will maintain its investment as the second-largest shareholder.

The deal valued the new company at around $600 million, two people familiar with the situation said.

It will come with a commercial agreement between Discovery and Group Nine Media that will allow ads to be sold across all their combined media properties, which range from Discovery's flagship cable channel to NowThis's news videos distributed on Facebook.

The investment comes as television giants have sought ways to reach younger audiences as cord-cutting accelerates and more people gravitate to digital streaming services.

In 2015, Comcast Corp.'s NBCUniversal invested $200 million in new media stars BuzzFeed and Vox Media as a way to reach younger audiences. Walt Disney Co. last year also became Vice Media's biggest backer with a $400 million investment in addition to a $250 million it made through A+E Networks, its partnership with Hearst Corp.

On an earnings call last December, Mr. Zaslav suggested Discovery had something to learn from the digital upstarts, despite having roughly 300 million monthly video views on its digital properties. "We make a little bit of money on that or break-even until we can figure out how to find the secret sauce," he told analysts. "In the meantime, we're close to as big as Vice and we haven't done a good enough job on monetizing it, so we'll do that."

The three sites, NowThis, the DoDo and Thrillist were all born out of investments made by New York-based digital media venture capital specialists Lerer Hippeau Ventures.

The DoDo, which focuses on animal content and advocacy, was founded in 2014 by Izzie Lerer, the daughter of the venture firm's co-founder, Ken Lerer. Thrillist, a lifestyle and entertainment site, was founded in 2005 by Mr. Lerer's son, Ben Lerer, who will become chief executive of Group Nine. NowThis was founded in 2012 by Mr. Lerer and Eric Hippeau.

"With this partnership, we will be able to offer our advertising partners a different kind of scale and it will allow Discovery to offer their ad partners access to both linear and an increased digital audience," Mr. Lerer said.

NowThis, which has 120 employees, produces up to 70 short-form pieces of video content a day that are mostly viewed on outside platforms like Facebook and SnapChat. Seeker, a digital video network launched in 2014 out of Discovery's acquisition of Revision3 two years earlier, largely circulates its content via YouTube.

Thrillist attracted an audience of 17.6 million unique visitors in August, up 28% from the same month a year earlier, according to comScore Inc. The DoDo attracted 6.1 million unique visitors in August, which was flat compared with the year before.

Write to Lukas I. Alpert at lukas.alpert@wsj.com

(END) Dow Jones Newswires

October 13, 2016 14:05 ET (18:05 GMT)

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