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Discovery Investing $100 Million to Merge Thrillist, NowThis, The Dodo in New Digital Venture

Discovery Communications, in a significant consolidation in the digital media sector, is investing $100 million into a new digital media holding company that will merge Thrillist Media Group, NowThis Media, The Dodo and Discovery’s digital network Seeker and its SourceFed Studios.

The new company, Group Nine Media, will be headed by Ben Lerer (pictured above), formerly CEO of Thrillist. The deal is expected to close by the end of 2016.

Discovery will own a 35% stake in Group Nine. German media conglomerate Axel Springer, a minority owner of Thrilist, will maintain its investment as the second-largest shareholder of Group Nine. According to the companies, the merging of the millennial-focused properties will immediately make Group Nine one of five biggest U.S.-based digital-media companies, generating more than 3.5 billion global monthly video views.

“Today marks the start of a strong new company with tremendous brands, reach and scale,” said David Zaslav, president and CEO, Discovery Communications, in a statement. “The merger of these assets will bring together best-in-class management, led by Ben and his team, expertise in data analytics technology and global reach to create one of the world’s largest digital-first content companies attracting young passionate enthusiasts that advertisers want to reach.”

The deal combines Discovery’s San Francisco-based digital networks with three ventures backed by seed-stage VC fund Lerer Hippeau Ventures, headquartered in New York City: lifestyle publisher Thrillist, founded in 2005 by Ben Lerer (son of Ken Lerer), which focuses on food, drink and travel; news aggregator NowThis, founded in 2012 by Ken Lerer and Eric Hippeau; and The Dodo, dedicated to animal lovers and advocacy, founded by Izzie Lerer (daughter of Ken Lerer) in 2014.

Under the terms of the pact, Discovery has an option to buy a controlling stake in Group Nine Media in the future. In addition, the deal encompasses a commercial agreement between Discovery and Group Nine under which both will be able to sell advertisers packages that span linear TV, digital and social content, and live events.

The agreement forming Group Nine will let Thrillist, NowThis and The Dodo remain independent while benefiting from Discovery’s backing, according to Ben Lerer.

“Each of our brands has found great success independently, but with consolidation of digital content companies around the corner, there is extraordinary value in all existing under one multi-brand roof,” Lerer said in a prepared statement.

Discovery’s foray into digital video kicked off with the 2012 acquisition of Revision3, followed a year later with its purchase of DeFranco Creative, the online channels and ventures of YouTube star Philip DeFranco. Now called Seeker and SourceFed Studios, those businesses will become part of Group Nine Media. Discovery also led rounds of funding in The Dodo in 2014 and 2015.

Thrillist has about 250 employees, while NowThis has 120, Seeker and Sourcefed Studios have a combined staff of 125, and The Dodo employs 45 people.

While each brand in the Group Nine portfolio will remain editorially independent, they will share services at the corporate level. Under the proposed combo, Thrillist’s sales team and content studio, The CoLab, will combine with NowThis Studios, The Dodo and Seeker’s branded-content team to create a core advertising solutions group across all Group Nine Media brands.

Group Nine also will combine Thrillist’s Pinnacle and NowThis’s Switchboard publishing platforms for all the brands. In addition, the new company will create a centralized, long-form video unit responsible for creating digital and linear TV programming across all properties.

Axel Springer was an investor in NowThis Media in addition to its stake in Thrillist. With the formation of the new company, Jens Müffelmann, president of Axel Springer USA and CEO of Axel Springer Digital Ventures, will become board member of Group Nine.

For Group Nine, LionTree Advisors was financial adviser and Cooley LLP acted was the legal adviser on the transaction. For Discovery, Proskauer Rose LLP was legal adviser.

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