For evidence that TV and digital media are continuing to converge, look no further than Discovery Communications.
Discovery has invested $100 million in Group Nine Media, a newly formed media holding company that will include four brands: Thrillist, NowThis Media, The Dodo and Discovery’s Seeker.
As part of the deal, Discovery Communications will start selling 360 deals across TV and Group Nine Media’s digital properties. Thrillist CEO Ben Lerer will helm as CEO of Group Nine.
The need for scale is setting off a wave of consolidation, Lerer told AdExchanger.
“We came to this point where we decided the future is consolidation,” Lerer said. “Building an independent brand out there is hard.”
Plus, companies like Discovery are spotting a new opportunity with platform-focused publishers. “Digital looks like a mirror image of cable in the ’80s,” Lerer added. “Google, Facebook and Twitter are the dominant pipes for distribution. And you have startup media companies building new media businesses on these pipes.”
Combined, the publications rack up 3.5 billion video views a month and generate 12 billion social impressions. They have 30 million followers on YouTube and 40 million on Facebook. The platform-focused publishers concentrate their efforts on branded content, not programmatic, Lerer said.
For that reason, Group Nine Media will devote the funding toward attracting big brands and expanding its sales team and combined branded content studio.
The publications will remain independent but can learn from one another. Lerer highlighted Seeker’s prowess on YouTube, where its creators have built massive audiences, as one area he wants the other brands to improve.
The deal resembles NBC Universal’s investments in Vox and BuzzFeed, Disney’s involvement in Vice, Turner and Scripps Networks Interactive’s stake in Refinery29 and Univision’s purchase of Gawker and Fusion.
Deals like Discovery and Group Nine offer a “win-win solution” for both the digital-first media companies and the established media companies, which explains their popularity, said Forrester analyst Susan Bidel.
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Established media companies “expand their reach into digital-first audiences to reinforce their relevance,” Bidel said. And they learn from the digital properties while monetizing them.
Smaller digital-first companies “benefit from the economies of scale and the relationships with big marketers that the larger companies offer,” she added.
Discovery Communications has made other investments in digital media leading up the deal.
It launched Seeker earlier this year and had invested in The Dodo. Seeker includes SourceFed Studios, a production studio with 10 million subscribers. Thrillist’s Lerer had also invested in The Dodo and NowThis as managing director of Lerer Hippeau Ventures.
Discovery Communications has the option of purchasing a future controlling stake in Group Nine Media. Axel Springer holds the second-largest stake in Group Nine Media.
