Discovery Invests in Digital-Media Outlets--Update
October 13 2016 - 2:52PM
Dow Jones News
By Lukas I. Alpert
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 $550 million, two
people familiar with the situation said, with the value of NowThis,
the DoDo and Thrillist making up about $400 million of the
total.
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 14:37 ET (18:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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