Since its inception in 1998, the Boston-based growth firm has made a variety of deals in middle-market companies, with most not involving debt. It typically strikes a partnership with existing management, tries to maximize revenue organically and helps a company scale. Great Hill has pulled off so many successful exits that it has a page on its website dedicated to its lucrative deals.
Deadspin will definitely not make it onto that page.
In April, the firm acquired the irreverent sports blog as part of its larger purchase of Gizmodo (fka Gawker) from Univision, with reports that the purchase price was significantly less than the $135 million Univision paid to buy Gizmodo out of bankruptcy in 2016. And ever since, it's been one public spat after the next. The feud has culminated in epic fashion, with the entire Deadspin writing staff quitting after management instructed writers to only cover topics that had some relation to sports.
Enter Sanders, who condemned Great Hill and G/O Media CEO Jim Spanfeller.
"I stand with the former Deadspin workers who decided not to bow to the greed of private equity vultures like @JimSpanfeller," Sanders tweeted Thursday night. "This is the kind of greed that is destroying journalism across the country, and together we are going to take them on."
This has quickly morphed into a nightmare for Great Hill. Former editor-in-chief Megan Greenwell left the site in August, trashing management on her way out. Former writer Laura Wagner wrote a detailed story panning Spanfeller's hiring practices. One former staffer wrote a blog post dubbed "Jim Spanfeller is an herb." Drew Magary, their most high-profile writer, resigned Thursday, joining a host of other bloggers who helped build a massive following for their often-vulgar coverage of sports, politics, media and any other subject they felt like writing about.
Pairing up private equity with a left-leaning blog that had become hugely popular for saying bug off to the establishment was never a good fit. But the debacle might have been avoided if the new management team could have co-existed with its writers. Deadspin was reportedly profitable before Great Hill got involved. Its non-sports stories drew more traffic than its sports stories, making management's decision to tell writers to "stick to sports" all the more puzzling.
Spanfeller, though, had developed his own playbook over decades in the digital media industry, with past stints as CEO of Forbes.com, a senior VP at Playboy magazine, publisher of Inc. Magazine and president of the consumer magazine group Ziff Davis, among other roles. And like a stubborn football coach who refuses to adjust his game plan at halftime, Spanfeller stuck to his proverbial guns, claiming after the purchase that he wanted to increase programmatic advertising and possibly introduce premium content. That in itself wasn't bad business, but his alleged micromanagement nonetheless alienated him from staffers, according to reports.
It all culminated with an outright revolt in the editorial department this week, with editor Barry Petchesky departing, but not after putting stories on the front page about a writer's encounter with dogs, a story about proper wedding dress etiquette and a few others that were much more vulgar.
"From the outset, CEO Jim Spanfeller has worked to undermine a successful site by curtailing its most well-read coverage because it makes him personally uncomfortable," the company's union, GMG, said in a statement. "This is now what journalism looks like and not what editorial independence looks like."
A spokesman for G/O responded to news outlets regarding the departures: "They resigned and we're sorry that they couldn't work within this incredibly broad coverage mandate. We're excited about Deadspin's future and we'll have some important updates in the coming days."
The extremely public debacle has already hit Great Hill hard, with the Twittersphere lashing out at the latest example of a PE firm's disastrous investment in a media company, whether it print or digital. The industry took a hit last month for laying off a large chunk of the staff at Sports Illustrated, instead hiring freelancers that make about $25,000 per year, after PE-backed Authentic Brands spun off publishing rights to another investment firm.
Great Hill did its own form of cost cutting when it shuttered Splinter, which served as Gizmodo's politics-focused blog. But the drama at Deadspin was more about simply disagreeing with new management than the supposed greed alleged by Sanders and others.
"The dudes with capital just could not get over the fact that the writers knew more than them about the property," New York University journalism professor Jay Rosen said on Twitter. "So they wrecked it."
The move has also cost Great Hill financially. Earlier this week, the staff wrote a post complaining about the site's new autoplay video ads, which they felt were disruptive for readers. Then State Farm Insurance subsequently called off its $1 million ad buy that included an auto-play video, per The Wall Street Journal.
Now, almost everyone has left, leaving Spanfeller and Great Hill to try to clean up the mess.
Featured illustration by Conor Hamill/PitchBook