Paul O’Donohoe played rugby for Leinster and Connacht and then worked in sports media rights. When we speak, however, he is sitting at his laptop in his kitchen in London.

On the other side of my computer screen is Liam Harrington, the chief business officer of Iconic Labs, who is best known for co-founding Unilad, which in 2016 ran the world’s biggest Facebook page.

Harrington is in his living room in London, with an indoor running machine just on the edge of shot. He has, he laughs, had little time to use it, as the last few months has been flat out trying to acquire the Joe media brand from administrators and examiners.

It is Wednesday evening, and that morning O’Donohoe, a partner in Greencastle Capital, and Iconic, a small listed media company, had finalised a deal to acquire the Joe media business in Britain.

Greencastle is financing the deal, and Iconic is being paid a monthly management fee of £50,000 as well as 25 per cent of all profits if certain targets are met. A deal to acquire Joe’s Irish business is ongoing so while they are free to talk in general about their plans, they are limited in what they can say about Ireland until the deal closes.

“Joe is a very, very powerful brand,” O’Donohoe said. “Greencastle and Iconic have a very strong working relationship and we look at opportunities together.”

David Sefton, a wealthy British businessman, is the principal money behind Greencastle. O’Donohoe said that Greencastle and Iconic had previously worked together when they bought the London Economic, a digital political publication.

“Greencastle financed that deal and Iconic brought its commercial expertise to the day to day operation,” O’Donohoe explained. “We were following the Joe story in The Currency and we then got in touch [with KPMG, the examiner and administrator to the business] and it went from there. It has been a long, long process.”

When I asked if, ultimately, they will repay Beach Point in full through cashflow or a refinance, O’Donohoe replied: “Exactly. Exactly. Yes.”

Harrington said he had spoken to Joe founder Niall McGarry after we reported in early March that Deloitte was selling two of its non-core businesses called Her.ie and Herfamily.ie.

“I am not sure if he was trying to see if I wanted to purchase those assets but for me I thought it would have been useful to chat just to see how everything was going,” he said. “Then after that we saw the second article about the examinership (of the entire business)…”

Iconic and Greencastle then became seriously interested. Iconic had been looking for a larger media acquisition for some time, and it had already picked up some smaller businesses. But Joe, with sales of close to €15 million last year across both markets, was playing in a bigger league. It had a brand with a big reach and a team that made award-winning content. But it also had been hit by controversy around a historic click-farm incident in the final quarter of 2019, which had sapped its cash and damaged its relations with media sales houses. This, combined with other issues, caused a fracture in the relationship with its main financier, Beach Point Capital. Its business, however, was decimated once the impact of Covid-19 became apparent – the advertising market collapsed, brands stopped spending, and sports and live events ground to a halt. Beach Point felt it had no choice but to seek the protection of the courts for the business, while it tried to find a new investor.

It was in this incredibly tough environment that Iconic and Greencastle entered the race to buy Joe.

Terms and conditions

The total amount paid for Joe is confidential, but The Currency has the broad strokes of the deal. Iconic Labs, as a listed company, only has to disclose the financial terms of the deal from its perspective, but Greencastle as a private company does not have to.

The Currency understands Joe Media UK was valued at £4.5 million (€5 million) and, in addition, €3.8 million is the proposed price for the business in Ireland. As the Irish part of the deal is not fully closed yet, this number could move, but not much. 

In total the new owners valued the combined Joe business at €8.8 million.

Revenue last year in Ireland and Britain for Joe was €14.6 million and if Covid-19 hadn’t happened it would undoubtedly have sold for much more, or it might not have been sold at all. But that is the uncertainty of business.

KPMG ran a competitive bidding process in Ireland and Britain. Despite the crisis KPMG’s Shane McCarthy in Dublin and Ian Leonard and Stuart Irwin in London were able to attract credible bidders for the digital media publisher.

The Greencastle/Iconic bid was the clear winner in the end, beating off a range of rival bidders including an offer from a consortium involving company founder Niall McGarry.

McGarry made a £3.6 million bid for the British business only. He teamed up with Little Dot Studios, an award-winning digital content firm employing 200 people in Munich, LA and London. The business is owned by All3Media, which is owned by Liberty Global and Discovery Communications, two of the world’s most successful media companies. His offer however was less, and only for the UK, so it failed.

Harrington and O’Donohoe won’t comment on how much they bought the British business for, or what they value the Irish division at. But will Beach Point still be a financier to the business? “Yes, very much so,” said O’Donohoe, adding that the exact terms of the deal will be confidential.

When I asked if, ultimately, they will repay Beach Point in full through cashflow or a refinance, O’Donohoe replied: “Exactly. Exactly. Yes.”

Developing a strategy in a changing market

Paul O’Donohoe first met Liam Harrington when he was working with Pitch International, a sports media rights company, between 2015 and 2018. “We had bought the rights to the football World Cup and we were discussing distribution with Unilad. We never even got close to monetising our conversation but we became friends. We kept in touch as we have similar thinking on how to do things.”

Harrington said he had spoken with O’Donohoe about Joe over the years, and how well it was doing. “We thought there was absolutely no way we would get our hands on Joe but that just goes to show how delicate the media and digital space can be. If you get something wrong, it can spiral out of control. We have the utmost respect for Joe as a brand and we are delighted to be able to take it to the next level.”

In 2018 Unilad went into administration with debts of £9 million, leading to Harrington leaving the business after it was acquired by LadBible. He has been through the same mill of losing his business that Joe founder Niall McGarry now finds himself in.

“I wouldn’t wish what I went through on anyone. I would always be happy to talk to anyone who goes through this and tell them that it does come through eventually,” Harrington said. “There is absolutely no issue with Niall at all. I think he did incredibly well to take it to where it is. He didn’t get involved in any of the dramas that were going on between Unilad and LadBible [which were fierce rivals] at the time. He swam in his own lane and grew Joe quietly and very well. I have huge respect for him.”

David Sefton has been involved in oil exploration in the Congo, and other businesses. How did they get to know him? “I was introduced to David through John [Quinlan, the chief executive of Iconic] and Liam. They had done some work with him at Unilad. We then decided to set up this private vehicle [Greencastle] with a focus on media and tech investments,” O’Donohoe said. 

Unilad, at its peak, reached over 500 million people a month. At only 24, Harrington was being interviewed by Forbes, but the business was also criticised for some of its laddish content. I ask Harrington about concerns he might bring Joe down-market. While Unilad had produced some good content, it had also published material that was criticised in The Guardian and elsewhere for being sexist and trashy. Joe was popular rather than populist.

Harrington said he was committed to keeping Joe where it was editorially. “I wouldn’t touch the content on Joe. I think it is quality,” he said. “I think the people doing it are doing it well. I love their tone of voice. I like what they stand for.”

Joe, he said, had achieved the tricky balance of appealing to its audience without being too high-brow or too down-market, and he was anxious to keep it that way.

Morale in the business had been damaged by controversies and the Covid-19 economy. What was Harrington going to do about that? “Over the next couple of days, we are going to make a conscious effort to try and meet as many of the staff in person as possible. It is hard at the moment but we will do it,” Harrington said. “Staff need to be given the reassurance that the company did not go into administration because of the content they were creating. The content and the product is fantastic and they must be told that.”

Harrington visited Joe’s office in Manchester yesterday. He wants to visit Ireland once that part of the deal closes, and it is safe to do so.

“I am sort of surprised they didn’t end up bouncing into America before heading over to the UK,” Harrington said.

Liam Harrington

I ask O’Donohoe about future investment. “This deal is being jointly financed by ourselves and Iconic Labs,” he said. “There will certainly be money invested with the intention of growing and scaling in the UK.” He said he could not talk about Ireland, yet, but they were also excited about the business there.

Would Iconic/Greencastle look at more acquisitions in Ireland? Or could it partner with similar businesses like Emmet O’Neill’s Lovin Group or Packed House, an underbidder for Joe?  “I think I would love to have the conversations,” Harrington said.

“Whether it is the commercial or the content side of things, we won’t be going very slow at all. We’ve a lot of things going on.”

Harrington has family roots in Mayo, and he says he believes the business has a big future here. “When I first heard about the direction that Joe was taking whereby they were putting more emphasis into the UK I was a little bit confused because of the success they have had in Ireland with Joe,” he said. “The amount of talent and content coming out of Ireland is fantastic. There is a hell of a lot of talent in Ireland and that is what appealed to me about Joe from the get go.”

He said the commercial mistakes that Joe had made in Ireland could be rectified.

“Look at me, I am a walking example of what happened at Unilad. We were very successful. We were doing some good things. There was nothing wrong with the actual product but occasionally we found, and perhaps it is the same with Joe, there was a little bit of mismanagement and a lack of direction and maybe the desire to grow too quickly beyond your means or ability.

“But when you get those things balanced up you have a serious powerhouse on your hands. I think there are loads of opportunities in Ireland and they are not being loved enough. If we can put strategy and direction behind them, they are a serious force.”

Will there be changes in terms of the commercial leadership in Ireland? “We can’t talk about Ireland at the moment,” Harrington said – at least until that part of the deal closes. “If I speak for the UK generally, we really want to get our teeth into the business and look at every person in it. But there is a reason why Joe has been doing well and that is the quality of its people.”

What about Joe’s female orientated brands? “With regards to her.ie and herfamily – frustratingly, because Ireland is still in a process and these fall under that, I’m not even allowed comment on them,” Harrington said. “A comment generally on my opinion of the brands are that again, they have severely been under appreciated and unloved. Her.ie in particular is one of the largest, if not the largest female brand in Ireland and when that is the case, you have to really put more resources towards that internally. It has unreal potential.”

Does Iconic/Greencastle have the deep pockets required to steer it through Covid-19? “We are in the middle of unprecedented circumstances. Every industry has been affected, and the media is no different,” O’Donohoe said. “We don’t see this as a slash-and-burn experience. We see this as a growth investment. We are certainly going to look at costs as we want to build a sustainable business in the future but there will also be investment.”

What is the editorial strategy? “We are going to do more in every area,” Harrington said. “The video formats are doing really well. The content they create is fantastic.”

“The area I would like to develop more is written editorial. There is still room for written editorial and Joe was doing it very well especially on the politics side,” Harrington said.

“That opens up another revenue source which is programmatic advertising. One of the areas, or mistakes, was the balance in the company. There was maybe too much emphasis on video and not enough on written editorial. However, that does not mean that we will be pulling away from video. There is room to have more of everything on every platform.”

“I think there were a lot of moving parts but they were not necessarily moving in unison,” he added. “They can all be good provided the machine is well oiled. It just got a bit rusty. These things are easy to change and develop and make better.”

Harrington said he believed his experience seeing Unilad go into administration would help him bring Joe back to profitability.

“I would say probably out of all the people in our industry now I am in the best position to be able to take Joe to the next level based upon those learnings. It wasn’t pretty,” Harrington said. “I never thought as a 26-year-old, and I am 28 now, I would have to go through an administration of a company that was once valued at a stupid amount of money.

“We are very well equipped and excited about being able to take Joe to the next level.”

Liam Harrington

“You have to realise you have to stabilise a business to be able to grow it and take it to that next level. Would I say I have learned a lot? An unbelievable amount but it hasn’t been easy.”

Would Joe ever go into new markets like the US? “The US is an obvious one. I am sort of surprised they didn’t end up bouncing into America before heading over to the UK,” Harrington said. “There is a strong Irish contingent over there. I do see it having the ability to grow in pockets… the Bostons, the Chicagos, where there are strong Irish foundations.”

“It would take quite a chunk of investment. As we do a deep dive into the audience we will see whether there are some American fans and is it worth trying to grow there.”

Harrington said Joe also had an opportunity to expand into new content verticals. “We can add new directions for revenue, bring a bit more culture and music perhaps to it as well. We are looking at sports too… there are serious opportunities.”

“Joe is definitely ahead of its competitors in terms of formats, that is a big growth and focus area,” O’Donohoe said. How closely will O’Donohoe be involved? “We are definitely going to be hands-on with this one, especially around the format side of things.”

“We see how this can transcend into linear television. It has already been doing a great job and we have ideas to grow to that and add to it.”

O’Donohoe’s brother Damien O’Donohoe is one of the founders of the Caribbean Premier League while another brother Matthew O’Donohoe is head of sport with the Creative Arts Agency in Britain which has clients like Jose Mourinho and England captain Harry Kane. A third brother, Conor, is lead singer with Wild Youth.

O’Donohoe said his brothers were not involved in business together, but they did help and advise each other. “We have not directly worked together but we have tapped into each other’s network,” he said. There is obviously a correlation (between some of what we do) so it makes sense to help each other.”

How will Covid-19 change the business? “Covid-19 is there and we are taking a hit on sport, events, branded content,” Harrington said. “You have to make decisions quickly to turn down content and bring more revenue in.”

“It would be very annoying for everyone if the event space didn’t come back in full force eventually,” he said. “This is just a pause for people. The market will come back and come back heavily. But it will be staggered so the best thing we can do is plan for when it does come back so we’re ready.”

“We want brands to be aware that there are new people coming in with a new vision and new strategy and we would love to talk to them and explain what is going on and explain how we can help. This is a fresh start opportunity,” he said. 

“We are very well equipped and excited about being able to take Joe to the next level.”

Niall McGarry: built a valuable business before losing it

In June Niall McGarry said the business he founded was “too big to fail” on a podcast with Irish Independent journalist Adrian Weckler. While the phrase drew comment from wags on social media, McGarry has been proven to be right. In the last decade, he built a significant business that remained worth millions despite the worst crisis in the history of Irish media. Mistakes were certainly made, but value was also created. The fact Joe sold for almost €10 million, despite everything, reflects well on him and his former team.

Other recent media deals tell a more nuanced story. The Sunday Business Post, a 30-year old brand, for example, was acquired by businessman Enda O’Coineen and his financiers for not much more than €1 million. While the price was low, it came with a multiyear print contract, adding to the true cost of the sale. Whatever way you look at it, however, Joe is selling for comfortably more than The SBP did when it last changed hands. But Joe’s success is even better illustrated when measured against a much bigger fish. A few years ago, Communicorp tried to sell radio station Newstalk, an 18-year-old business, to Independent News & Media (INM) but failed to clinch a deal. INM itself was later sold to Mediahuis for €145 million, a tiny fraction of the €3.5 billion the business was valued at when it peaked as Denis O’Brien ploughed into its stock. Stripping out cash of €80 million, the Belgium-Dutch media company acquired INM, which has titles older than the state, for just €64 million. In the long-run, INM is likely to be a decent buy for Mediahuis.

But for Ireland’s once largest private investor in the Irish media, Denis O’Brien, the media sector has been a money pit.

He has lost the guts of €600 million between his loss-making radio station group Communicorp and his ill-fated foray into INM.

This is before considering the opportunity cost of the millionaire’s time spent managing his loss-making media investments rather than his mobile phone company Digicel.

In this context, McGarry, who created Joe from scratch and successfully took it outside Ireland into Britain, has not done so badly. Even in the worst of times, Joe remained a valuable business.

While gone from Joe, he will undoubtedly return to business in time, hardened, more experienced and ready to go again.