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When RR Donnelley bought Journalism Online from Steve Brill, Gordon Grovitz, Leo Hindery, Jr., and their investors last March, I reported that the deal range was $35 million to $45 million — and got a lot of raised eyebrows in return.
The deal structure revealed in this week’s 10-K filing shows a payment of $19.6 million (plus $400,000 in cash that came with the company) and a contingent payout — what we call an earnout — of $15.3 million “based on achieving certain volume milestones for Journalism Online’s business following its acquisition by the Company.” The language describes the “prior owners” but only co-presidents Brill and Crovitz went to Donnelley and would be eligible for the additional pay.
That puts the total deal value at $35 million — for now. It might stay capped but my understanding is the deal was structured in a way that would allow for additional pay under certain circumstances that have not been spelled out publicly and could reach the higher end of the originally reported range. While Brill and Crovitz were out publicly selling the concept of Journalism Online and e-commerce product Press+ as possible salvation for newspapers and online news outlets, Chicago-based Donnelley is very quiet about goals and process.
Journalism Online, founded in April 2009, went from startup to exit in just under two years. This past year it went from 20 affiliate launches with various business models ranging from metered pay to donation to more than 200; Crovitz told The Globe and Mail 300 launches already are planned for this year. Customers include McClatchey, Torstar, Postmedia, Media News and Lee.
(Hat tip to Theo Francis for tweeting about the filing and to a reader for bringing it to our attention.)