LadBible closes in on Unilad buy but questions linger over ‘manifestly unfair’ bid process
With the surprise buyer set to be revealed imminently doubt is now being cast on the integrity of the bidding process
Behind the scenes, administrators have said that a single party (believed to be LadBible) has reached an agreement to enter an exclusivity period with Unilad.
However, with the surprise buyer set to be revealed imminently doubt is now being cast on the integrity of the bidding process, with one party calling it "manifestly unfair".
When Unilad slumped into administration last week, the battle to unlock the commercial potential from the social publisher's reach (in August it boasted 1.4bn monthly video views on Facebook) started almost instantly.
With the original buyout deadline set for Monday (8 October) the process was so fast-paced that only the most agile of companies could participate. On top of LadBible’s bid, a joint effort flooded in from Linton Capital; Rocket Media and Jungle Creations, and another from Goat Agency.
Involvement from DMGT, The Hook and Social Chain was also rumoured. At one stage 33 parties were looking at the company, according to administrator emails seen by The Drum.
In a further plot twist, it transpired last week that Unilad was indebted to its biggest rival to the tune of £5m. LadBible purchased the debt from ousted Unilad co-founder Alex Partridge which cemented it as the primary creditor. Unilad was also in the red to HMRC for £1.5m; one source close to the deal claimed the firm's overall debt was as high as £11m.
Though it might now look like this buying tussle is coming to an end, there could be even more theatre in store, with Unilad managing director John Quinlan telling The Drum that bidders will be closely examining the conduct of the administrator.
“There is a lot of suspicion around the process,” he explained. “For example, the original deadline was Monday lunchtime, that was then moved to Tuesday lunchtime and then we got an email at 2PM saying the deadline was now 5PM. No one had time to react."
Harry Hugo, co-founder of the Goat agency, said he believes his company issued a winning bid before the deadline was extended. "We feel like we had our pants pulled down. We worked for the last five days non-stop and really, it feels like we never had a chance."
He went on: "It shows how tight-knit this process was, the fact that a social media agency was actually the furthest away from the bidder."
From their origins, Unilad and LadBible have been entwined. Although both have attempted to diversify and differentiate, the ‘Lads’ have struggled to escape a magnetic pull that grouped their businesses – but before we’ll get a glimpse at what a joint offering might look like, there are business issues to be ironed out.
A ‘manifestly unfair’ bidding process?
For the past seven days, rumours of who would be bidding swirled within Unilad, where some 200 staff awaited their fate. This was despite bidders signing restrictive non-disclosure agreements. As one source told The Drum: "Everyone knows everyone in this space, we know and are friends with most of the field."
LadBible had a head start since it had already filed a bid a week before Unilad entered administration. It claims its approach was ignored. Meanwhile, there were concerns in the Unilad camp that the three-business day bid deadline set by administrators Leonard Curtis would benefit primary creditor LadBible.
It's understood the owners favoured a joint bid from Linton Capital LLP, Rocket Media and Jungle Creations. David Sefton, managing partner of Linton Capital LLP and interim chief executive of Unilad, told The Drum his lawyers will now issue a letter to the administrator's representatives over what he said was a "manifestly unfair" extension on bids.
He said: "When was the winning bid submitted? We were told that the deadline was 12pm on Monday and after submitting our bid I got on a plane. Several hours after the auction had taken place, we got an email saying the deadline had been extended in circumstances that we were not in a position to take any advantage of. This manifestly unfair because we would have increased our bid."
"There was nothing we could have done about it. We were rushed to get the bid in for 12pm, we would have increased the bid."
He concluded: "The administrator is going to have to select a preferred bidder and god forbid the bid that he selected is less than the bid that we made, or came in after the deadline. [That raises] very, very serious questions."
Two bidders corroborated that vital documents like balance sheets were missing, the scale of Unilad's total debt was unclear, and spreadsheets were bundled into PDF documents.
The administrator has returned no comment to The Drum. When asked to comment on the "manifestly unfair claims" LadBible also offered no comment.
So how has Unilad ended up here?
Despite all the back and forth this week, former Independent media editor and The Drum columnist Ian Burrell noted that even in administration Unilad is “consistently generating incredible engagement levels”. This is due to its some 40 million-strong userbase on Facebook and Instagram. A few days ago too, Quinlan told the BBC the business was "doing better than ever".
So how has it ended up here?
“The value of its brand is greatly diminished by Unilad’s long-term difficulties in monetising that fantastic reach because it depends on Facebook-owned platforms and has limited amounts of original content,” Burrell explained.
Burrell also was quick to note, though, that despite Unilad’s issues, there was no shortage of potential buyers.
“More established media owners are envious of Unilad’s relationship with the hard-to-reach Generation Y audience, and then there were rival social media publishers who would have liked to buy it to take out the competition.”
Ishbel MacLeod, marketing manager at social agency Hydrogen, agreed. "Facebook is Unilad's bread and butter. Although viral content is good for engagement, and Unilad does have a strong social presence, it isn’t profitable It’s had to expand into the fields of programmatic and content marketing,” she said.
MacLeod observed that Unilad has worked with brands such as Cadbury’s and film brands to create branded content, but LadBible has taken it one step further with the launch of its agency JoyRide.
“Last year LadBible even created a content-ranking system for nervous advertisers so they could decide what kind of video their content will appear beside. This was a brilliant idea and means that it’s an easier sell to clients – and therefore a bigger revenue generator."
What does it mean for the 'Lad' brands
The industry will be watching closely to see what shape the Unilad brand could potentially take under LadBible management.
Richard Beech, chief commercial officer of DriveTribe, who has worked at BBC, Joe Media, BuzzFeed and The Mirror, says that Unilad’s existing brand has a strong business model but that doesn't mean it should rest on its laurels.
“I think if Unilad suddenly took on a new name, there would be almost no negative fallout. The audience is pretty well balanced between male and female, and dropping the ‘lad’ would help reinforce that.
For both camps, identity has been an issue. Wedded by their ‘lad’ identities, they both live on Facebook; they boast similar white text on black logos; and they've both built social empires on the back of similar strains of viral content.
Beech argues that both publishers could be likened to the “digital age version of You’ve Been Framed”. It’s not a derogatory comparison, and to counter Burrell’s point it means the value of the company is not just tied up in social channels. “They have a brand that people think ‘I have to send this video into to them,” he said.
Additionally, he gave both platforms credit for evolving over the last few years too though: “I think the 'lad' brands did a fair amount to change negative connotations (like LadBible's Trash Isles effort) around lad culture, and I think the world has just moved on.”
While the intrinsic brands and longevity of a business model ultimately tied to Facebook might stir a little debate, EZY Insight data shows just how much engagement the lads drive - they are far greater in scale than the likes of BBC News and The New York Times, which is no mean feat.
For MacLeod, the “real problem” for Unilad has been its internal business issues. Earlier this year, its co-chief executive and founder stepped down following an internal investigation into historical conduct at the company.
“A strategy review should have been held to try to turn around the situation earlier. With a strategy review, and a new owner, we could see Unilad continue to grow,” she finished.
With great social power, comes great social responsibility
Unilad’s roots are just as histrionic as this week’s bidding process. Supposed “Facebook genius” Alex Partridge launched the original site in 2010. On LinkedIn he also credits himself as the founder of LadBible in 2011. You’ll find no mention of him on LadBible however, as far as it is concerned, the ball wasn’t truly rolling until its chief executive Alexander Solomou bought it in 2012.
Partridge’s control of each property was short-lived.
The initial Unilad lasted two years, its closing epitaph a “too far” rape joke: “85% of rape cases go unreported. That seems to be fairly good odds." It had been furnishing an unserviced lads’ mag audience with "banter" – in other words, questionable content no advertiser would willingly be aligned with now.
Unilad was relaunched in 2014 with Partridge ceding 66% of his stake to new owners Liam Harrington and Sam Bentley who later ousted Partridge and removed his administrative access. His 33% stake denied to him, a lengthy court battle ended in 2017 with the judge reprimanding Bentley and Harrington for exhibiting both a “lack of honesty and credibility” and their “failures to disclose information”
But the lads have come full circle now, and they have an irrepressible hold on social media publishing. More than ever before does the LadBible Group have the ability to speak to a vast range of young people.
Earlier this year LadBible reasserted its desire to build a "positively social" brand platform. As it edges closer its no-holds-barred takeover of Unilad, the onus is on it to live by its self-coined mantra: 'With Social Power Comes Social Responsibility'.