For Geraldine Laybourne, the chance to serve as chairman of Alloy Inc. offered a perfect segue to back into a creative role in the entertainment biz.
The former head of Nickelodeon and founder of Oxygen Media has been recruited by ZelnickMedia to serve as a non-executive chairman of the company that has been an innovator in packaging teen- and young adult-oriented books and TV shows such as “Gossip Girl,” “The Vampire Diaries” and ABC Family’s new summer skein “Pretty Little Liars.” ZelnickMedia on Thursday unveiled an agreement to acquire the publicly held Alloy in a cash deal valued at $126.5 million, or $9.80 per share.
Laybourne has been active on corporate boards and consulting with various companies in the nearly three years since she sold Oxygen to NBC Universal for $925 million. But she has missed having a direct stake in a creative enterprise. With Alloy, she’s signing on to a company that is already on a roll and has strong management in place, Laybourne said.
“I’ve had a lot of fun in the technology space, but I really missed the creative space,” Laybourne told Daily Variety. “I think Alloy has figured out a spectactular way to operate with this new generation (of consumers). You look at their hit rate with books and television and it’s pretty amazing, and I think it’s because they have a fantastic (development) process and really terrific leadership.”
Alloy’s focus of targeting the so-called “milliennials,” or consumers in the 10-29 age range, is a natural fit for the woman who built Nickelodeon into a money-minting global juggernaut for Viacom. Alloy was founded in 1996 as a direct marketing and mail-order catalog venture aimed at the younger set. It quickly moved into publishing, marketing and promotion and media. The Gotham-based outfit, which today has about 600 employees, went public in 1999.
Alloy shares climbed 92 cents, or nearly 11%, on Thursday to close at $9.51. ZelnickMedia said its acquisition price marked a 27% premium over Alloy’s average closing price during the past month. For the fiscal year ended Jan. 31, Alloy posted revenue of $205 million and adjusted earnings of $15.2 million.
In showbiz circles, Alloy is best known for developing book series, including “The Sisterhood of the Traveling Pants,” that lend themselves to film and TV adaptations. It also owns the Channel One educational cabler that is distribbed to 8,000 middle schools and high schools nationwide.
Alloy founders Matt Diamond and Jim Johnson will continue to run the company as CEO and chief operating officer, respectively. Other senior execs are expected to remain in place. Laybourne said she was impressed with the TV production operation run Alloy Entertainment topper Leslie Morgenstein.
Laybourne has long been friendly with Strauss Zelnick, the former prexy of 20th Century Fox and BMG Entertainment who has been active as a media investor for the past decade. After the Oxygen deal was completed, Zelnick loaned Laybourne an office in his Gotham HQ. ZelnickMedia has been scouting around for investments that Laybourne might assist with, but nothing clicked for her until Alloy came on the market late last year.
Another industry vet with ties to ZelnickMedia, former Marvel Entertainment chief operating officer Bill Jemas, will also join Alloy’s board. Laybourne’s background in entertainment and Jemas’ long history in licensing and merchandising, with Marvel as well as the NBA and Madison Square Garden, was one of the factors that drove the acquisition, according Jordan Turkewitz and Andrew Vogel, the ZelnickMedia partners who spearheaded the deal.
“The synergy created by what (ZelnickMedia) can bring to the table with our skills and our people is what makes it so interesting as we look forward to the next chapter for Alloy,” Vogel said.
Alloy was also attractive because it has a healthy balance sheet and no debt to speak of. But the company will nonetheless benefit from going private with a deep-pocketed owner rather than having to keep such a close watch on quarterly earnings performance. ZelnickMedia evaluated Alloy as a strategic move for the company as much as it scoured the company’s earnings, Turkewitz said.
“As investors, we like to think about strategy and execution more than quarter-to-quarter planning,” he said.
Laybourne said she sees opportunity for Alloy to get more active in digital production. The company already is working on a webisodes initiative tied to some of its well-known properties. The demand for this kind of entertainment with Alloy’s target demo is growing, especially with the heat behind tablet computers like the iPad and other mobile devices.
“They need to spend some money on developing digital content. I think there’s going to be some interesting things developing in the tablet world,” Laybourne said. “Right now it’s really nowhere — but with this demographic, that’s where the future is.”
ZelnickMedia’s investment portfolio includes a stake and managing control of vidgame publisher Take-Two Interactive Software.