Gawker Auction: What Univision Is Buying

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Following a daylong auction yesterday, the groundbreaking blog network Gawker Media, which declared bankruptcy last month, was sold to Univision for the sum of $135 million. The only other bidder was the publishing company Ziff Davis. That Univision, the conglomerate operator of the largest Spanish-language broadcast network in the country, would acquire a famously confrontational (and English-language) collection of upstart blogs seems odd. But it makes sense for Univision — and might be Gawker’s best outcome, too.

Gawker is a profitable and growing business

It’s important to clarify that Gawker’s debts were the result of legal action, not operational dysfunction: Absent a vindictive tech billionaire, the company is profitable. In 2014, Gawker brought in $43.8 million in revenue, a figure that rose to $48.7 million last year and is on track to rise similarly this year (figures according to founder Nick Denton). Univision paying $135 million for a company expected to bring in more than $50 million in revenue this year — that is, in the midst of a major lawsuit and bankruptcy — is, to put it lightly, a very good deal.

Univision doesn’t exactly need Gawker’s income; according to Forbes, its revenue last year was $2.9 billion. But Gawker has been making money in interesting ways that lots of publishers would like to match — in particular, e-commerce, which has grown quickly as a source of revenue for the company during the last several years. In 2014, the company earned $10 million through referral commissions from sites like Amazon for links to products on both its its news sites, and a separate blog called Kinja Deals; now, according to Denton, the Deals division covers all of Gawker’s editorial spending.

Univision wants millennials (and traffic) and has had trouble finding them

Money matters aside, Univision clearly wants to have a digital media presence untethered from its Spanish-language media, if its previous acquisitions are any indication. In May of 2015, it picked up the Root, a website aimed primarily at a black readers. At the beginning of 2016, Univision bought a controlling stake in the Onion, which also runs pop-culture site the A.V. Club and bizarro BuzzFeed parody Clickhole.

And then, of course, there is Fusion. Originally a collaboration between Univision and Disney meant to reach, uh … millennials(?), the cable network and digital-media operation soon became known for spending large sums to hire away prominent names in media in order to build up an underperforming website and television schedule. Fusion’s lethargic start wasn’t doing it for Disney, so they divested, giving full control over to Univision. By all accounts, it’s still giving Fusion plenty of runway to build … something. Just over half of Gawker’s audience are millennials, according to Digiday, making the acquisition an easy way to boost younger readership.

Gawker could use the resources

If Univision’s commitment to sinking millions of dollars into Fusion is any indication, Gawker now has a corporate benefactor with deep pockets and a willingness to fund unprofitable ventures. Funding a competitive digital-media company in this environment requires a lot of cash; in particular as advertisers and distribution channels have begun to focus on expensive-to-produce video. Large organizations like BuzzFeed and Vox Media have stabilized themselves by selling stakes to media conglomerates like Comcast and NBCUniversal; HBO is the largest investor in Bill Simmons’s new site the Ringer. From that perspective, the Univision deal looks pretty familiar.

That being said, Gawker’s coverage of Fusion thus far has been pretty unflattering (headline: “Fusion Is Losing a Shit Ton of Money”), so it’s probably for the best that Univision also agreed to take over Gawker’s lease on its Union Square offices, rather than move them uptown.

Univision is more willing to take risks than Ziff Davis

Lastly, even if Univision wasn’t a good fit for Gawker, they’d sure as hell be a better fit than other bidder Ziff Davis, which owns PC Magazine, gaming website IGN, AskMen.com, and a whole bunch of other odds and ends, like speedtest.net. Ziff’s portfolio of past and current properties heavily skews towards the dudebro/tech/gamer readership, which would have been bad news for sites like Jezebel, the newly politics-focused Gawker.com, and possibly even Deadspin. Announcing that they had pulled out of the auction, Ziff CEO Vivek Shah stated that “we would have been excited to add Gizmodo, Lifehacker and a few of the other properties to our portfolio.” Ziff was clearly only interested in parts of the company, never the whole thing. With Univision, every Gawker site stands a fighting chance.

Update: Well, most Gawker sites stand a fighting chance. CNN’s Tom Kludt is reporting that Univision has three days before the close of sale to decide what to do about Gawker.com, the namesake site that is now considered a toxic brand (granted, a toxic brand that brings in 16 million readers a month). Univision has reportedly agreed to retain 95 percent of Gawker’s staff, so even if the site is shuttered, the employees need somewhere to go — possibly putting their political muscle to work at Fusion. Following the sale, Denton himself is, per The Wall Street Journal, out altogether.