I followed up with Source Interlink Media President Chris Argentieri to ask him a few questions about the Grind Networks acquisition.
First, I was curious how Source Interlink financed the deal, since Source Interlink filed for bankruptcy in 2009.
Argentieri told me the prepackaged bankruptcy that had the approval of Source Interlink lenders allowed the company to emerge with a much stronger balance sheet and a changed capital structure.
The company’s business is strong and improving, he said, and the acquisition was funded by free cash flow.
“Our cash position hasn’t been better in recent history,” he said.
Argentieri declined to say how much Source Interlink paid for Grind Networks.
(Right: A screen grab of GrindTV this morning. Links to ASG titles are already at the top of the page.)
On page 2: how the merger will work
I also asked him how the merger will work. Grind owns and operates a series of mostly action sports websites that have great portal relationships – GrindTV provides action sports news for Yahoo Sports, for instance.
With the deal, ASG grows its audience to approximately 10 million, up from 1.5 million.
However, Grind hadn’t made much headway with advertisers, in part because the company had limited sales resources, and endemic action sports advertisers had not embraced the sites, Argentieri said.
Grind also lacked some brand identity in action sports, he said.
(Right: Erik Hawkins, Grind CEO.)
Now, ASG will bring its branded content to Grind and Grind’s large audience, which will make the sites more compelling for both readers and advertisers alike, Argentieri said.
I asked if the anyone from ASG had talked about the potential already with endemic advertisers, and Argentieri said they have, and the feedback has been positive.
ASG plans to keep its separate URLs and identities for its existing sites, and the goal is to use the expertise of the two top Grind executives, who have experience at Yahoo and other internet companies, to build out online platforms and strategies for the group.
Source Interlink is excited about action sports as a “vertical,” Argentieri said. While the local ASG executives have done good work, Source Interlink has not put its best foot forward and invested enough in its action sports properties, he said.
With this acquisition, Source Interlink is looking to change that.
(Above: Greg Morrow, Grind President and COO.)
