The Messenger: Conservative Investors Offer to Bail Out News Startup for Majority Stake
Struggling digital news startup The Messenger is reportedly in talks with a group of conservative investors. The group, according to Axios which cited two sources familiar with the conversation, is looking to acquire a majority stake — meaning it’s a bailout that would require founder Jimmy Finkelstein to relinquish control.
The deal, said to be $30 million for a 51% stake in the independent media publication, was proposed by a consortium made up of right-wing supporters including financier and Tucker Carlson backer Omeed Malik, Republican operative Garrett Ventry, digital media agency founder Ryan Coyne, and former Parler CEO George Farmer.
Axios says the investors are not interested in getting involved with the news outlet’s editorial aspect but are expected to influence how it will generate revenue. “They believe The Messenger needs to create more revenue opportunities beyond traffic-based advertising and events,” Axios wrote.
The Messenger was earlier reported to be looking to raise $20 million on a second round of investments. The media startup was able to raise $50 million before it launched last year, and executives had hoped to earn an ambitious $100 million in revenue by 2024.
At that time, the company said that they would not do another round of fundraising, and was hoping to meet its funding needs through profits. In an industry where its competitors are increasingly turning to subscriptions to generate income, The Messenger decided to rely on pageviews for revenue, with its ad model relying mostly on programmatic advertising.
The startup laid out plans to grow big, and fast, saying they would hire around 550 journalists within the year, with 150 already onboard at its launch, but stalled hiring at around 300.
Things aren’t turning out as well as they had hoped — with a slowdown in the ad market, and with social media becoming less and less reliable in terms of bringing in traffic for news sites. The company laid off 20 people in its business and editorial departments on Wednesday.
A report from Semafor said that the news startup “weighed shutting the publication down at a meeting on Friday, after learning that the company is on track to run out of cash at the end of January,” and said that the board also discussed the possibility of shutting down, and that Finkelstein appeared open to selling the organization.
But The Messenger denied these claims and said that they have “already secured investment as part of our second raise, and so the notion of us discussing closure is beyond absurd,” but did not give details on the second fundraising.
Sources say that Finkelstein would consider the offer from the conservative consortium, but noted that nothing was finalized during the discussion. A spokesperson for the media startup said that the company is considering a number of financial options.
Before it launched, The Messenger was touted to be 74-year-old Finkelstein’s “last major act in the media industry.” The 74-year-old media executive owned Washington DC-based The Hill before selling it to Nexstar in 2021.
It was envisioned to be an “alternative to a national news media that he says has come under the sway of partisan influences. The site will be free and supported by advertising, with an events business to follow,” the New York Times wrote in March.
Information for this story was found via The New York Times, Axios, Semafor, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
