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Discovery and the Lerer family are combining in a $550 million deal

The TV programmer takes its cash, adds sites run and backed by Ken, Ben and Izzie Lerer and makes a new company.

Ben Lerer
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Another big TV network is making another big bet on digital.

Discovery Communications is putting $100 million into a deal with Group Nine Media, a new holding company that combines some Discovery assets with Thrillist Media Group, The Dodo and NowThis Media.

The deal gives Discovery 35 percent of Group Nine, with the option to buy a controlling stake in two years. People familiar with the deal say it values the combined company, including Discovery’s cash, at around $550 million.

Thrillist, Dodo and NowThis are all run by or backed by members of the Lerer family, a prominent force in digital media. Investor Ken Lerer, who co-founded Huffington Post and chairs BuzzFeed, backed NowThis, a short-form video maker, and The Dodo, a digital publisher that focuses on animal content, via his Lerer Hippeau investment company.

His son Ben Lerer founded Thrillist as a dude-centric publisher in 2004, and his daughter Izzie runs The Dodo. Ben Lerer will be CEO of Group Nine.

Discovery’s investment seems to parallel ones NBCUniversal made last year, when it bought minority stakes in BuzzFeed and Vox Media — which owns this site — for $200 million apiece.

Those deals were supposed to help Comcast’s TV unit figure out the digital landscape, while making bets on potential winners; since then both BuzzFeed and Vox have collaborated on advertising and publishing deals with NBCUniversal. Discovery says it will sell ads in conjunction with Group Nine, too.

And like the NBCUniversal investments, some of Discovery’s money will be used to buy equity held by existing investors. Less than half of the $100 million will be spent on secondary shares, according to people familiar with the deal.

Discovery will also chip in Seeker, its digital video network that used to be called Revision 3, and SourceFed, the video production company run by early YouTube star Philip DeFranco. It says the combined company generates more than 3.5 billion video views a month, primarily on Facebook.

“Our determination was that we need more scale, and that there’s only going to be five to eight seats at the table,” Discovery CEO David Zaslav said. “We see this as a very clever way to get to big scale.”

The deal also means Ken Lerer, who has spent years in digital, now has significant ties to three big traditional TV companies: In addition to Discovery-Group Nine and NBCUniversal-BuzzFeed, he is also on Viacom’s board of directors.

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