Top executives at Group Nine Media are launching a SPAC, or special purpose acquisition vehicle, to go public and hunt for a digital media business to buy. They plan to merge that company, whatever it may be, with with Group Nine, owner of TheDodo, NowThis, Thrillist, Seeker and PopSugar.
SPACs, called ‘blank check’ entities, assemble managers, raise money in a public offering and use the cash to buy actual companies, which then inherit the SPAC’s stock exchange listing without the stress of a formal IPO. The Group Nine move is testament to the growing allure of SPACs that now number in the hundreds and continued consolidation in digital media.
Its SPAC, the Group Nine Acquisition Corp. (GNAC) filled with SEC for an IPO to raise an estimated $230 million to “pursue business combination opportunities with companies operating in the digital media and adjacent industries including, but not limited to, the social media, e-commerce, events, and digital publishing and marketing sectors.” The announcement comes a month after Buzzfeed bought HuffPost. Other deals in the space include Vox Media’s acquisition of New York Magazine’s parent and Vice Media’s purchase of Refinery29.
This SPAC is unusual in that it is planning a sort of two-step deal involving Group Nine.
“We believe the combination of Group Nine Media and another target business in the digital media and adjacent industries, including the social media, e-commerce, events, and digital publishing and marketing sectors, under the Group Nine Media umbrella will allow the resulting combined company to leverage Group Nine Media’s existing licenses, experienced management team and geographic footprint and offer significant synergy and long-term value creation opportunities for our investors and serve as a platform for further growth,” the filing said.
“Our objective is to create a scalable digital media platform,” it said, noting that Group Nine Media’s audience reach to 44% of the U.S. population monthly, with nearly 7 billion video views across its portfolio of sites.
SPACs aren’t allowed to approach or field overtures from potential acquisition targets until they are active. They have one year to make a deal or, poof, they disappear.
Group Nine Media’s chairman-CEO Ben Lerer, its president Brian Sugar and its CFO Sean Macnew will hold the same titles at GNAC. And familiar face makes a return bow as director nominee – Richard Parsons, the former chairman-CEO of Time Warner.
Parsons is currently a founding partner of Imagination Capital, a New York venture capital firm launched in 2017. He joined Time Warner (which was acquired by AT&T in 2018) as president in 1995 and held the top job from 2009 to 2012. He’s served as chairman of big banks like Citigroup and is currently on the boards of Estée Lauder, Madison Square Garden Sports and Lazard.
Lerer, founder of Thrillist, and son of Huffington Post co-founder and former Buzzfeed chairman Ken Lerer, is managing partner at early-stage venture capital fund Lerer Hippeau whose active investments include Allbirds, Axios, BuzzFeed, Casper Sleep, Glossier, Warby Parker and Group Nine Media.
Group Nine was formed in 2016 when the owners of Thrillist, NowThis and TheDodo combined with Discovery’s Seeker. Discovery also invested in the business, which acquired Popsugar last year.
SPACS can focus on any sector but the list of those prowling for media and showbiz deals is growing.
Entertainment finance firm Forest Road and a team of A-list media insiders from Tom Staggs to Kevin Mayer last month closed a $300 million IPO of a new SPAC to buy a private company in media, tech or telecom. Cindy Holland, who departed Netflix recently after an 18-year run joined the board of a new SPAC, Horizon Acquisition Corp II.
Liberty Media guru John Malone recently filed to create the Liberty Media Acquisition Corporation SPAC. And Gerry Cardinale’s RedBird Capital is launching a SPAC called RedBall Acquisition to target sports media properties including data analytics companies or possibly a sports franchise.
Media and entertainment execs Harry Sloane and Jeff Sagansky were early, having launched a series of SPACs in recent years including the Diamond Eagle and Flying Eagle Acquisition Corps. Flying Eagle acquired mobile gaming platform Skillz and will be taking it public. Diamond Eagle merged with DraftKings, creating the only pure-play sports betting company.
Playboy will be going public again after merging with the Mountain Crest Acquisition Corp. SPAC.