What happens when a private equity firm partners with a proudly snarky media company that has made a living poking fun at the establishment? Look no further than the recent drama at Deadspin.
The trouble began when Great Hill Partners, a Boston-based growth equity firm, purchased Gizmodo Media and satirical website The Onion from Univision Communications in April, with Recode reporting the deal price was less than $50 million. As part of the transaction, Great Hill assumed control of Gizmodo’s portfolio blog network, which includes sports-focused Deadspin, tech site Gizmodo and politics-focused The Concourse.
The deal marked the latest ownership change for Gizmodo (fka Gawker), which Univision purchased in 2016 for $135 million after former wrestling icon Hulk Hogan sued the company with financial backing from Peter Thiel, ultimately winning a $31 million settlement and forcing the company into bankruptcy.
Three years later, Great Hill has now merged Gizmodo and The Onion into a new entity dubbed “G/O Media.” And in the firm’s biggest decision so far, it put former Forbes.com CEO and digital media veteran Jim Spanfeller in charge as chief executive and a co-investor in the business. But the transition has been a worst-case scenario for management and employees alike, highlighting the PR risk a private equity firm can take on when it acquires a media company with an independent streak.
Earlier this month, Deadspin writer Laura Wagner wrote a damning feature on Spanfeller’s management style, alleging that women were overlooked for leadership roles and that Spanfeller brought on old colleagues to fill major roles after telling employees there wouldn’t be management turnover, among other complaints. It was a brave move for the journalist (not to mention the editors who approved it), as the article took direct aim at the company’s leaders.
That was just the beginning of the drama. Two weeks ago, Deadspin Editor-in-Chief Megan Greenwell announced she was leaving her post and joining Wired magazine, citing a range of issues with management and telling The Daily Beast she was “undermined, gaslit and lied to” by management. In addition, she said she was told to tell her writers to “stick to sports,” which in her view didn’t make much sense since the site has also gained a devoted following for covering politics, tech and social issues. Not to mention, the stories that went beyond sports were often the most popular with readers, per Greenwell.
In her farewell blog post, Greenwell called out Great Hill, likening the Deadspin acquisition to a business meeting from the HBO series Succession, where one of the lead characters argues that its media empire should keep its burgeoning digital media site alive and put “adults in the room.”
Greenwell wrote:
It seems likely that a similar conversation played out earlier this year in the Back Bay offices of Great Hill Partners, the private-equity firm that now owns the company where I am on the payroll until the end of today. The managing partners—all of them men, white, and members of the one percent—agreed to buy this company at a steep discount, and to bring in another white male one percenter as co-owner and CEO. This company had a good platform and strong brands; all they needed to do was hire a few people who could make it profitable. All they needed was adults in the room.
Greenwell joins a growing group of editors who have resigned or been forced out at media companies backed by private equity firms or hedge funds. Chuck Plunkett, the former editorial page editor at the Alden-backed Denver Post, resigned from his position in May after running a series of editorials critical of Alden’s cost-cutting, saying he was being censored by management. Dave Krieger, an editorial page editor for Alden’s Boulder Daily Camera, was fired after management nixed an editorial in which he criticized Alden for layoffs and cost-cutting.
But Greenwell took it a step further, more or less calling out these owners for perceived arrogance.
A metastasizing swath of media is controlled by private-equity vultures and capricious billionaires and other people who genuinely believe that they are rich because they are smart and that they are smart because they are rich, and that anyone less rich is by definition less smart. They know what they know, and they don’t need to know anything else.
Deadspin Deputy Editor Barry Petchesky echoed Greenwell’s comments in the staff’s farewell post to her, saying Greenwell kept the writers “shielded from the predatory private-equity scam that now runs the place.” Jon Eiseman, the company’s head of audience and social media, wrote that the company had been “corrupted by private equity money and run by poorly dressed failsons.” Greenwell herself also focused on Great Hill specifically, claiming the firm was looking for a quick cash-out rather than creating a growing business.
Among the people Great Hill Partners has fired and driven out of the company and treated like children are people who have been responsible for creating and sustaining a successful digital media business for over a decade. Even after Univision bought Gawker Media (sans Gawker) and renamed it Gizmodo Media Group, and even after the company was saddled with debt from numerous failed Univision ventures, the core business model kept working. The entire reason I wanted to work here was that the sites kept putting out best-in-class journalism through crisis after crisis. I have no doubt they will do the same now.
Great Hill and Spanfeller didn’t respond to interview requests.
Surely, Greenwell’s take was heavily skewed toward the perspective of employees. But it nonetheless reinforces how private equity takeovers and other ownership changes can run the risk of alienating or upsetting workers with management turnover, new expectations and pursuing a different strategic direction. Take your pick of Glassdoor reviews for companies recently acquired through a leveraged buyout. It isn’t always pretty.
Still, the latest dust-up isn’t great news for Great Hill, which in June was named to Inc’s list of the top 50 founder-friendly private equity firms for entrepreneurs. In July, the firm closed its seventh flagship fund on $2.5 billion, exceeding a $2 billion target and a predecessor that raised $1.5 billion. Perhaps when the firm puts its latest fund to work, it will think twice before teaming up with a media company known for publicly prodding those it doesn’t like.
Illustration by PitchBook
Related read: Don’t count on private equity to save newspapers
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