Univision Holdings' $135 million acquisition of Gawker Media, should it be approved, will forever be remembered for the sordid details of retired pro wrestler Hulk Hogan's pact with tech billionaire Peter Thiel to exact revenge against a collection of brassy websites and their owner, Nick Denton.
But once the backstory of a Florida court awarding $140 million in damages to Hogan, born Terry Gene Bollea, for Gawker's publication of a snippet of a sex video is stripped away, the sale of the New York media company highlights the industry's eagerness to get larger through consolidation.
Univision, which revealed plans for an initial public offering in July 2015, has been acquiring and expanding its digital portfolio to compliment its chief business as the largest Spanish-language broadcaster in the U.S. The New York company purchased a minority stake in humor site The Onion earlier this year, and it previously acquired The Root, a news and culture site for African Americans, and took complete ownership of Fusion, a pop culture and news site that has drawn comparisons to Buzzfeed.
As marketers seek to get the biggest bang for their spending, they're moving more of their money to media companies that can offer the widest, most efficient distribution, said Mike Vorhaus, president of Magid Advisors, a part of consulting firm Frank N. Magid Associates.
Every media company, Univision included, is competing with Facebook (FB - Get Report) and Alphabet's Google (GOOG - Get Report) , which accounted for a staggering 72% of all digital ad revenue outside of China in the second quarter, according to an Aug. 10 investor report from Brian Wieser of Pivotal Research Group. (Facebook is a portfolio holding of Action Alerts PLUS, managed by TheStreet's founder, Jim Cramer.)
"People buying advertising want to buy at scale," Vorhaus said from Los Angeles. "Consolidation allows that to happen, and it lowers the cost of sale. It's obvious that the small and midsize content companies are going to get acquired, and Gawker's sale to Univision is another example."
The acquisition will give Univision a big online boost. In July, Gawker Media's sites attracted 56.1 million unique U.S. visitors, according to media measurement firm comScore (SCOR - Get Report) . That compares with 13.6 million for The Onion and 11.6 million for Fusion.
As if more evidence was needed, MSG Networks (MSGN - Get Report) said Tuesday it had taken a stake in Townsquare Media, owner of more than 300 U.S. radio stations and websites as well as a live music events business in the U.S. and Canada.
And last week, Time Warner (TWX) purchased a minority stake in millennial women-focused Refinery29, raising that website's valuation to as much as $500 million. Time Warner earlier this year increased its position in Mashable, another all-things millennial website, while Comcast (CMCSA - Get Report) made two $200 million investments last year in BuzzFeed and VoxMedia, publisher of The Verge, Recode and SBNation.
On an even larger scale, Verizon (VZ - Get Report) agreed last month to acquire the core operations of Yahoo! (YHOO) for $4.8 billion after buying AOL -- and the Engadget, Huffington Post and other websites -- in May 2015 for $4.4 billion.
By comparison, Univision's acquisition of Gawker Media is a smaller but no less consequential deal for a media company eager to expand its demographic reach by concentrating on websites with loyal audiences. Besides Gawker, those sites include Gizmodo, Lifehacker, Kotaku, Jalopnik, Deadspin and Jezebel.
Ian Schafer, founder and chairman of Deep Focus, a New York digital advertising agency, said Gawker's sale price should allow Denton to meet his obligation to the Pinellas County (Fla.) Circuit Court and also would give Univision a set of websites that historically have generated unusually high advertising rates.
Gawker's sites generated a compound annual growth rate of about 24% between 2012 and 2015 as the company's revenue grew to about $49.9 million last year, court filings show.
"Like with The Onion, Gawker is a media property that is disproportionately influential for its audience size," Schafer said. "The media landscape is very crowded, and you need brands that are differentiating, and Gawker is certain unlike most every website out there."
Gawker likely will be integrated into Univision's digital media group overseen by Isaac Lee. Univision has been looking for ways to bolster its online presence as valuations for smaller, niche cable TV stations have fallen as viewers increasingly migrate to online platforms, both free and subscription based, such as Netflix (NFLX - Get Report) , Time Warner's HBO NOW and Amazon (AMZN - Get Report) Prime.
To acquire Gawker, Univision beat out Ziff Davis, the tech-heavy publisher owned by j2 Global, which started a bankruptcy auction Tuesday with a $90 million lead, or stalking-horse, bid. A transcript of the auction, which began at 10 a.m., shows the two players battled back and forth until 7 pm, when Ziff Davis declined to increase its final $131 million offer.
The auction was held at the New York offices of Ropes & Gray, which represents Gawker in its Chapter 11 filing, prompted by the Florida court's award in March of $115 million in damages to Bollea. That judgment later was increased to $140 million.
Gawker has appealed the judgment.
Arguably, Univision, which declined comment for this story, was eager to acquire Gawker for more than the possibility of scale. Gawker's websites, Schafer said, have demonstrated that they don't lose their audience as they age, which is common with other pop culture sites.
"Univision needed to invest in brands that do it in a different way," Schafer said. "And at the price they're paying, Gawker could prove to be a steal considering that its profile is even higher because of all this publicity."