Coming through on their promise to provide more color, the folks from Roo Group called today to let CEO Rob Petty give some more explanation to the company’s recent investment deal with News Corp., and hinted that another similar deal with another large media company is coming soon, perhaps as soon as Thursday.
Since the deal snuck onto the Wall Street Journal website Sunday night, most news outlets jumped the gun and wrote about the investment before the official Roo release was posted. Petty said that the News Corp. investment involves no up-front money (he said the company raised $20 million in investment money last fall), but is instead a way to take the relationship between Roo and News Corp. “to the next level.”
To us, that sounds a little like a bribe, albeit a cheap investment to keep News Corp. using Roo’s technology on its big-media sites, like the Times of London.
Trying to counter some of the reports of turmoil surrounding the deal, Petty confirmed that News Corp. leader Rupert Murdoch personally knew of the deal. He said that the deal was kept small intentionally, so that News Corp. doesn’t own too much of Roo (which might discourage other media companies from using Roo’s wares). Petty said News Corp. does not have a board seat, and the deal doesn’t restrict Roo from doing similar deals with other media companies. Petty then hinted that Roo might have more news about a similar deal as early as Thursday morning.
On the company’s history, Petty said that Roo’s decision to “go public” by basically purchasing the assets of an already-public company — one that manufactured organic products for male sexual performance enhancement — was borne out of the desperate times of the Internet bust.
“At the end of 2001, the boom had collapsed,” Petty said. Trying to find funding then, he said, was not easy — “the VCs weren’t there, the traditional funding routes weren’t there.” By taking over the structure of Virilitec Industries, Roo gained “currency to do acquisitions, and a means of raising small pieces of [investment] cash,” Petty said.
“It was a very appropriate way to do things at the time,” said Petty, who said that if Roo were at a similar stage today, it would probably still be private and not subject to inquisitions about its past that are revealed via SEC filings.