Group Nine Media Raises Additional $50 Million From Discovery and Axel Springer
September 09 2019 - 7:29AM
Dow Jones News
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)
Copyright (c) 2019 Dow Jones & Company, Inc.
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