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By Benjamin Mullin
Group Nine Media Inc. raised an additional $50 million from existing investors Discovery Inc. and Axel Springer SE, an investment that people familiar with the matter said values the owner of NowThis, the Dodo and Thrillist at more than $600 million when accounting for the new cash.
Group Nine Media was created in 2016 with a $100 million investment by Discovery that valued the company at about $585 million. The company has raised $190 million to date.
Group Nine Media was formed by the merger of several online publishing brands: NowThis News, food-focused Thrillist, technology brand Seeker and the Dodo, which caters to animal lovers. The company initially won notice for popular videos that went viral on social media, but it has since expanded its offerings to include documentaries, events, cable-TV shows and digital-video series.
Closely held Group Nine Media isn't profitable, according to people familiar with the matter, but its revenue since the merger is twice what the combined entities generated before the deal, another person said. Revenue was boosted by growth in the company's advertising business and new distribution agreements, including a recent deal to produce "Izzy Bee's Koala World" for video-streaming giant Netflix Inc.
Ben Lerer, who founded Thrillist, is the CEO of Group Nine Media. His sister Izzie Lerer is the chief creative officer and founder of the Dodo. Their father, Kenneth Lerer, a veteran media executive who co-founded BuzzFeed and HuffPost, is on Group Nine Media's board and is an investor in the company through Lerer Hippeau Ventures.
The younger Mr. Lerer said Group Nine Media's business strategy has been consistent since the company's inception: Developing diverse sources of revenue, building specialized brands that lead consumer categories and centralizing services and functions.
"What I think we've been particularly good at is setting a clear strategy and staying steadfastly committed to executing on it," he said.
Group Nine Media has begun producing shows for Discovery's cable channels. "Dodo Heroes," a collaboration between the Dodo and Animal Planet, was greenlit for a second season earlier this year. The two companies have also teamed up to create cross-platform content, as in the case of Seeker's "The Swim," a project covering long-distance swimmer Ben Lecomte's attempt to cross the Pacific Ocean.
David Zaslav, Discovery's president and CEO, said in a statement that Discovery's investment in Group Nine Media dovetails with the company's strategy of delivering video to viewers on a variety of devices.
"They have category-defining brands that connect with young audiences through the best short, mid and long-form storytelling on mobile," Mr. Zaslav said.
Discovery has invested more than $150 million in Group Nine Media over three funding rounds.
Jan Bayer, the president of news media international at Axel Springer, said in a statement that Group Nine Media has what it takes to "create a real digital winner."
The investment is one of the largest equity rounds raised by a U.S.-based digital media company this year. The digital media sector, once a darling for venture capitalists and strategic investors, has cooled off of late due in part to competition for digital advertising dollars from companies like Facebook Inc., Amazon.com Inc. and Alphabet Inc.'s Google.
Several digital-media companies, including Mic Network Inc. and Mashable Inc., have sold to buyers in recent years at a fraction of their once-lofty valuations when they could no longer raise money on favorable terms.
Group Nine Media has held conversations this year with other companies in the digital-media sector, including Popsugar and BuzzFeed, about potential deals, according to people familiar with the matter. Mr. Lerer declined to comment on specific acquisition targets, but the company said that the funding round gives Group Nine Media a stronger balance sheet for strategic acquisitions.
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
September 09, 2019 07:14 ET (11:14 GMT)
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