A year ago, financial services giant Guggenheim Partners trumpeted an ambitious new strategy, with visions of creating a powerhouse in the digital media and entertainment space.
The firm, which claims to have more than $190 billion in assets under its management globally, launched Guggenheim Digital Media in January 2013 with the intent to allocate “significant capital to acquire and invest in new media companies and properties that would meaningfully expand its current portfolio.”
Hiring the caliber of executive capable of restructuring the Internet landscape with a few strokes of the pen wasn’t going to be easy, but Guggenheim seemingly pulled it off: Ross Levinsohn, who briefly held the CEO post at Yahoo before Marissa Mayer came in, was hired. Here was a longtime media bizzer who worked at News Corp., CBS and HBO, with big acquisitions like MySpace to his credit.
There were reasons to believe Levinsohn and GDM (as its parent company dubbed it) would make serious waves. In 2012, Guggenheim Partners led the $2.2 billion deal to buy the Los Angeles Dodgers, and spent a reported $370 million for Dick Clark Prods.
But GDM hasn’t closed any deals under Levinsohn, whose future at the company is looking cloudy after its publishing unit was pulled out from under his oversight earlier this month. (Disclosure: Variety is owned by Penske Media Corporation, which competes with Guggenheim-owned publication the Hollywood Reporter.)
The lack of dealmaking is not for want of effort. Under Levinsohn, the group has actively explored acquisitions of or investments in several Internet video companies, with the goal of building scale across multiple properties. Levinsohn badly wanted Hulu, and GDM had submitted a bid for the company with private-equity firm KKR. But Hulu’s parents — Disney, 21st Century Fox and NBCUniversal — decided to keep the venture. Speaking at a Fortune conference last summer, he expressed disappointment that Hulu eluded his grasp.
GDM also has wanted to take a position in musicvideo site Vevo, as has been previously reported. (That investment potentially is still in play, according to sources.) In addition, the group has approached several other digital-video players seeking deals, according to industry sources, including multichannel networks Fullscreen, Maker Studios and Machinima; video sites Crunchyroll and Viki; and digital-ad technology company FreeWheel.
Why haven’t the expected pacts materialized? Asked for comment, a Guggenheim rep said, “As anyone who has done M&A work knows, you see a lot of companies before you find the right one.”
According to a high-ranking exec familiar with GDM’s strategy, the deals it has attempted to execute are relatively complex. “It’s not like they are going after small startups without any revenue,” this person said.
Still, GDM stayed quiet during 2013, even though it was a big year for mergers and acquisitions in the media and entertainment sector, particularly in digital. The value of media and marketing M&A deals last year was $97.3 billion, led by the merger of Publicis Groupe SA and Omnicom Group, according to investment bank Berkery Noyes.
“In the past few years, there has continued to be an increase in the sector, in terms of number of deals and deal value,” said Bart Spiegel, partner with PricewaterhouseCoopers’ entertainment, media and communications practice.
The one deal GDM has completed: It bought the remaining stake it didn’t own in Backstage last April. In restructuring its publishing division this month, Guggenheim named former Backstage CEO John Amato to lead business initiatives of a group merging THR and Billboard. Levinsohn, under the new structure, is no longer managing the company’s trade publications. He will continue to report directly to Guggenheim Partners president Todd Boehly.
Two of Levinsohn’s key lieutenants have already departed. Executive VP Zander Lurie, who previously ran strategic development for CBS, confirmed in an email in January that he was leaving. Michel Protti quit as GDM’s senior VP of strategy and operations last fall to join Facebook.
Levinsohn is widely expected to exit. (He was unavailable for an interview.) “Ross will continue to pursue promising media opportunities in the digital space,” a Guggenheim rep said. Whether the pursuit leads to capture, however, is still an open question.