The 17-year-old CMS and digital tech provider owned by Gary Gannaway and Raycom Media is being purchased by publicly traded Frankly, a San Francisco-based provider of messaging technology. After the deal closes, Raycom will have a 20% interest in the combined company.
Worldnow Being Sold In $45 Million Deal
Worldnow, a leading purveyor of content management systems and digital media technology for TV stations and other local media, has been purchased by social media provider Frankly Inc for $45 million in cash and stock, it was announced this morning.
The publicly traded Frankly (TSX-V:TLK) offers a white label chat technology that can be incorporated into native mobile apps of all kinds. It currently powers the chat features of apps for Victoria’s Secret, the NBA’s Sacramento Kings and Rep. Charlie Rangel (R-N.Y.), among others.
Based in San Francisco since its inception two years ago, Frankly also owns the direct-to-consumer messaging app Frankly Chat for iOS and Android devices. It was launched in September 2013.
Worldnow is owned by chairman, CEO and founder Gary Gannaway (63%) and Raycom Media (37%). Under terms of the deal, Frankly will pay them $10 million in cash and $20 million in Frankly stock at closing and an additional $15 million in cash on the first anniversary of the closing.
After the deal closes, Raycom will have a 20% interest in the combined company. Joe Fiveash, VP of digital media, strategy and business development at Raycom, will join the Frankly board.
Steve Chung, CEO of Frankly, said he was attracted to Worldnow by the opportunity to marry messaging and the news producers — the broadcasters — that use the Worldnow platform.
“If you take a leading news platform like Worldnow, and you take a leading mobile messaging platform like Frankly, you essentially have a synergistic relationship that is really innovative and market leading that nobody else in this space is able to do,” he said.
Frankly will offer Woldnow clients and other broadcasters “engagement” with viewers, he said. “What news organizations truly want today is to be relevant, to have a dialogue with their audience and to have that in real time.”
At the same time, he said, they want their news stories and video to circulate as far and wide as they possibly can.
“In 2015, any piece of content from anywhere in the world can spread like wildfire in an instant, and the preferred medium for that is native mobile because that is where people are spending their time,” he said.
“We could really be a partner to local broadcasters in helping them transform from just a one-to-many broadcast system to a truly interactive and bi-directional conversation in real time.”
Frankly went public in January and trades on the TSX Venture Exchange in Toronto under the TLK symbol. Its stock closed yesterday at $2.59. Its shareholders include SK Telecom, a major South Korean wireless carrier. Backers also include Stanford University and JJR Private Capital, which is providing a $10 million line of credit.
According to Chung, Worldnow will remain more or less intact and operate as a unit of Frankly in New York under the direction of Lou Schwartz, who joined Worldnow several months ago as chief strategy officer.
Schwartz was instrumental in bringing Frankly and Worldnow together. He is a longtime friend of Gannaway and he once worked with Chung at Kit Digital.
“The Frankly and Worldnow joint offering will enable us to better serve our combined customers,” said Schwartz in a prepared statement. “With a combined chat and content platform, our customers have an industry-leading engagement and monetization solution that enables them to interact directly with their consumers in real time, allowing the content and brand owners to become more relevant and increase mindshare on their own digital properties.”
Gannaway, who will be leaving the company, said that broadcasters need the engagement tools that Frankly can provide. “Today, it’s pretty evident that in the years to come, primary distribution will no longer be over the air but over the Internet,” he said. “News organizations’ success is not coming through their publishing efforts but through their news being picked up by search and social. Their most valuable content — video consumption — is paltry in comparison.”
Chung said that it is important for Frankly to have a presence in New York among the advertising and media communities there. If Frankly had not acquired Worldnow, he said, Frankly would have eventually opened an office in the city.
The press release announcing the deal reveals a little of Worldnow’s financials for the first time. According to the release, Worldnow has grown steadily in the past five years, with $26 million in revenue and $6.5 million in EBITDA in 2014.
Worldnow has battled a variety of competitors over the years, most notably Internet Broadcasting System (now Lakana), to supply TV stations with customized websites and other digital platforms. WorldNow also operates a digital ad network across many of its client sites.
In addition to Raycom, its principal clients include Meredith, Cox, Dispatch, Quincy, Gray, Sunbeam Television, Media General, Sinclair Broadcast Group, CBS and ABC.
Over the last couple of years, Nexstar Broadcasting has consolidated Internet Broadcasting and other competitors into a division called Lakana.