It was around 2011 when Isaac Lee, then a 40-year-old news executive at the Spanish-language broadcaster Univision, saw the writing on the wall, and it read: multicultural millennials. So Lee and Univision made a bold, some thought outlandish, series of bets. It all began with Fusion, a general-interest Web site and corresponding cable channel launched in 2012 and 2013, respectively, in partnership with Disney’s ABC. The enterprise generated buzz by nabbing big-name recruits with big salaries. (Felix Salmon, the financial columnist, was reportedly making more than $400,000 a year, likely a multiple of what he would have earned at another digital-first player.) Over the next several years, Lee got Univision to buy a handful of other buzzy Web properties (The Root, The Onion, A.V. Club), while also creating a few new Web properties of its own (Project Earth, TrackRecord, The Takeout).
Fusion, which was wholly acquired by Univision in 2016 as losses from the cable channel piled up, endured some struggles with audience growth and, less tangibly, the conundrum of people not quite understanding what it was trying to do or be. But Lee, the empire builder, forged ahead. His biggest coup was the August 2016 acquisition of a half dozen orphaned Gawker Media brands, including Gizmodo, Jezebel, and Deadspin. (The Gawker.com flagship, now defunct, was deemed too radioactive; Fusion.net was rebranded as Fusion.tv, an online home for the cable channel specifically.) Univision bought the sites for $135 million in a bankruptcy auction that played out in the wake of Hulk Hogan and Peter Thiel’s legal jihad against Gawker founder Nick Denton. The deal met with a mix of curiosity and skepticism—“a desperation play for millennials,” snarled Michael Wolff—but it seemed a significant boon in terms of Lee’s ambition to build a scalable content portfolio that could compete with the BuzzFeeds and Vox Medias of the world, while infusing its legacy parent company with some of the young digital mojo that could help Univision adapt for the future. “I expect the addition of these digital-first media assets,” which were collectively renamed Gizmodo Media Group, “will help FMG exceed the demands of the young, cross-cultural influencers we serve,” Lee said in a prepared statement at the time.
Less than two years after that acquisition, and seven years since Lee first started assembling his fiefdom, Univision is letting the air out of the Fusion Media Group balloon at a fairly rapid rate. The company has been targeted for “steep cost cuts,” as The Wall Street Journal put it in a March 16 article, revealing that number crunchers from Boston Consulting Group had recommended a 35 percent budget reduction. The anticipated downsizing is part of a companywide cost-saving exercise at Univision, which scrapped its I.P.O. plans last month and is now preparing to bid farewell to C.E.O. Randy Falco. Buried in that same Journal article was an anonymously sourced tidbit that might as well have been a “for-sale” sign: “As Univision works to improve the returns from Fusion Media Group, it would likely be open to in-bound interest for all or part of the group.”
A well-connected source in the M&A world told me there are already a few interested parties, including Jay Penske’s Penske Media Corporation (Deadline, Variety, WWD, Rolling Stone), which has $200 million from Saudia Arabia’s Public Investment Fund to go shopping with. Barry Diller’s IAC (The Daily Beast, CollegeHumor) also has its eye on the F.M.G. bounty, the same source said. (Both companies declined to comment.)
Meanwhile, Lee’s lieutenants have been dropping like flies as Univision brass consolidate authority. Felipe Holguin, C.E.O. of Fusion Media Group, and Daniel Eilemberg, president of the Fusion cable network, were among 20 employees laid off several weeks ago; Gizmodo Media Group C.E.O. Raju Narisetti announced this week that he will leave at the end of April. But the most notable figure who has dropped out of the F.M.G. orbit is Isaac Lee himself.
Lee, who serves as Univision’s chief content officer, became less involved in F.M.G.’s day-to-day operations starting in January 2017, when he took on an additional role as chief content officer of the Mexico City-based Televisa, which owns a 40 percent stake in New York-based Univision. For the past month or so, according to multiple insiders, Lee has been explicitly uninvolved. “Nobody has even mentioned Isaac,” one executive told me. “For a company that was all about Isaac, where everything was Isaac, all of a sudden, it’s as if he’s vanished.” A person familiar with Lee’s thinking said, “Isaac is mad that they blew up his company. It’s a complete shit show.”
The groaning salaries for A-list writers and editors of the erstwhile flagship Fusion site, combined with its anemic journalistic identity, often made it a self-satirical cartoon of new-media ambition—but as a whole, the overall F.M.G. portfolio was, at least in the current marketplace of astronomically invested digital unicorns, far from a failure, its defenders would argue. Insiders, though they wouldn’t supply numbers, said that 2018 was to be the year it finally hit its stride. But Univision had different priorities. Last fall, as Univision grappled with industry-wide headwinds, renewed competition from rival broadcaster Telemundo, years of debt, and pressure to turn the business around for shareholders eyeing their exit, the mothership gave Fusion Media Group a green light to look for investors interested in buying a minority stake as high as $200 million.
The problem was, there were no takers, which sources familiar with the matter attributed to a cool marketplace following a quick succession of bad headlines for digital media: Mashable selling for a fraction of its valuation; Vice and BuzzFeed’s 2017 revenue misses; Facebook changing its newsfeed to de-emphasize content from publishers. Univision had given Lee “a very long leash,” in the words of another company executive. But faced with antsy shareholders and urgent challenges to its legacy revenue streams, the board made a decision to clip Fusion Media Group’s wings as Univision doubled down on the core business.
Univision wanted Lee to be fully focused on his job in Mexico, the one that impacts a substantial part of the bottom line. During a board meeting the first week of March, according to people with knowledge of the event, the investor hunt was called off and it was made clear that Fusion Media Group would no longer be a standalone company with its own layers of management. Days later, on March 7, the Journal reported that Univision would undergo a sweeping business review and cost cutting in advance of a potential sale. “This isn’t about Isaac,” someone who knows him and has done business with Fusion Media Group, told me. “What happened here is an example of a company cutting the very areas in which they should be investing.” (Rosemary Mercedes, a Univision spokeswoman, said, “We are focused on challenging ourselves to pursue strategies that strengthen our competitive edge and best position us for the future. As part of this process, we are taking steps necessary for our business to continue to thrive.”)
Lee, for his part, has still had some moments in the spotlight lately. On March 22, he was one of a number of prominent panelists to appear at a headline-generating Financial Times conference at the Time Warner Center. On March 2, Lee was photographed by a Daily Mail paparazzo as he and Univision chairman Haim Saban entered Jared Kushner and Ivanka Trump’s Washington, D.C., home for a Purim celebration. “He still runs a big chunk” of Univision, said one of the executives I spoke with. “It’s just that he’s not a part of the business he built anymore.”
Indeed, there was nary a mention of Lee during a Tuesday morning all-hands meeting led by Sameer Deen, one of the Univision executives tapped to oversee Gizmodo Media Group going forward. The main takeaways, according to a G.M.G. employee, were that Deen “did not have any real hard info to communicate to an angry staff,” and that there’s “still no telling how big the cuts will be—or when.” According to a partial transcript published by The Daily Beast, the staffers in the room were downright exasperated. “You’re about to enter a tornado of nightmares,” one of them told Deen. “I think you’re beginning to see a picture of how angry everybody is.”
Just a few weeks ago, the G.M.G. crew was in a more celebratory mood. Deadspin had triggered a national news frenzy with its now infamous video compiling dozens of Sinclair Broadcast Group anchors around the U.S. forced to recite the same Trump-friendly script bemoaning “one-sided news stories plaguing our country” and “the sharing of biased and false news.” Journalistically, it was a reminder that these sites still have some fire left. On the business side, meanwhile, G.M.G. met its 2017 revenue goal, two people familiar with the matter told me. Employees felt like they’d kicked off 2018 with some momentum.
Now, they might be wondering which is the more attractive uncertainty: sticking it out with Univision and potentially being gutted, or possibly being sold to new overlords and facing down the unknown yet again. “I see no upside to being associated with Univision at this point,” the Gizmodo Media Group employee said. “They look more like an anchor than a lifeboat to me. That said, there’s no guarantee another buyer would be better.”
