Digital news platforms, boosted through venture capital and other sources, have given many investors headaches. Notable recent meltdowns include Mic.com, which laid off its editorial staff and sold itself for parts, and layoffs this year at Buzzfeed, HuffPost and other platforms across the battered media landscape.
Great Hill Partners has ventured into this landscape by acquiring Gizmodo Media Group, which includes Gizmodo.com, the Onion, Jezebel, Deadspin and Lifehacker. Great Hill acquired the business from Univision Communications on April 8.
Terms weren’t disclosed, but the Wall Street Journal reported the price tag at under $135 million.
Despite rising competition for digital advertising from Google, Facebook and Amazon, Great Hill plans to leverage Gizmodo’s brand recognition and loyal audiences to generate ad revenue, Chris Gaffney, managing partner at Great Hill, told Buyouts.
By consolidating digital media companies, the company, renamed G/O Media post-acquisition, would be able to amortize costs and create a bigger platform for digital ads, a source familiar with media investments told Buyouts.
“[Programmatic] advertising is becoming more important not less, which is a significant advantage to brands seeking to reach our scale, and hard-to-reach audiences,” Gaffney said.
“At the same time, we want to diversify the revenue stream by scaling our e-commerce operations and partnership model.”
G/O Media will work to increase the reach of Gizmodo’s websites and their e-commerce offerings, said new CEO James Spanfeller. Spanfeller previously led Forbes as CEO.
Gizmodo operates several e-commerce websites that offer branded clothing and other items for purchase, including gizmodo.merchdirect.com and store.theonion.com.
Currently, multiple media companies are exploring ways to integrate e-commerce capabilities into their media properties, the media source said.
Great Hill wants to revitalize Gizmodo’s webpage design and add capabilities in video, Gaffney said. The firm also plans to grow in the digital media content space both organically and through add-ons, he said.
The investment came from Great Hill Equity Partners Fund VI, which in February 2017 closed on a hard cap of $1.5 billion, exceeding its $1.25 billion target.
Action Item: Contact Chris Gaffney at Great Hill at +1 617-790-9420.