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Federated Media Sells Content Marketing Arm To LIN Media, Rebrands Programmatic Ad Business As Sovrn

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Online advertising company Federated Media has sold off its content marketing business, as well as the Federated Media name, to publicly-traded LIN Media. The programmatic ad side of the organization, which was built up around Federated’s acquisition of Lijit in 2011, will continue to operate as an independent company called sovrn Holdings.

Fortune’s Erin Griffith broke the news last night, which was confirmed by Federated Media this morning. The financial terms of the acquisition were not disclosed.

Federated Media was founded nearly a decade ago, in 2005, and raised more than $50 million in funding from Omidyar Network, Oak Investment Partners, and others. As an ad network, the company was an early partner for a number of independent blogs (including TechCrunch).

Over time, it focused increasingly on “conversational marketing” campaigns that were customized and interactive, before shifting again to focus on programmatic ad-buying. (Both shifts came with layoffs.)

The company says that Federated founder John Battelle (who returned to the CEO role about a year ago) will serve as executive chairman at sovrn, while Walter Knapp (pictured above, formerly COO of Lijit and Federated) will be CEO. It also says the programmatic business saw 93 percent revenue growth between 2012 and 2013, with nearly 20,000 publishers in the network. Sovrn will be headquartered in Boulder, Colo., where Lijit was based.

“The proceeds from this sale will allow us to lean heavily into our platform-based programmatic ad services and to roll-out an expanded set of offerings to engage audiences and drive monetization,” Knapp said in the release.

Update: Here’s the email that Federated Media sent to its publishers.

Dear FM Publishers,

We are writing to you with some exciting news. Federated Media Publishing announced today (Press Release) that it has sold its content marketing business and all associated trademarks, including the Federated Media brand, to LIN Digital Media LLC, a subsidiary of LIN Media (NYSE: LIN).

All content marketing and related media programs that have been managed by Federated Media will remain with Federated Media. LIN Digital Media is acquiring all assets relating to Federated Media’s content marketing business, including its content marketing employee base. As such, existing programs will continue to be executed by the same employees you’ve been working with, and they still work for Federated Media, which is now a portfolio company of LIN Digital Media.

We truly believe that this is a strategic growth opportunity for both companies. Since Federated Media was founded in 2005, we have built a robust and sustainable content marketing and digital media business. LIN Media, historically grounded in television, has built a strong digital media business over the past ten years. This deal allows LIN to expand its Digital Media ecosystem while allowing Federated Media to continue to build upon the conversational marketing model it founded in 2005. LIN will be further investing in the Federated Media brand and business model, and we will continue to work with all Federated Media’s content marketing publishers and marketing partners.

How Does This Change Affect Me?

Most importantly, we know you might be asking how these changes may impact your business. To that effect, it is business as usual at Federated Media. You will continue working with the same Federated Media team and any and all opportunities will continue to move forward as scheduled.

Joining LIN Media allows Federated Media to reinvest in you, the publisher talent we have cultivated since our founding in 2005. This means providing you with tools, resources and revenue opportunities to help you continue to grow your business and your brand. Further, Federated Media as part of LIN Media means our content and display inventory will now be available to LIN media’s sales organization, providing additional revenue opportunities to publishers. LIN Media will also invest in new opportunities for you, including mobile, social, video and premium revenue growth.
Finally, we are pleased to share that while we’ve gotten to know the LIN Media team it is clear they value two important FM principles:

1) The value that’s created when the authenticity and passion of independent publishers meets a contextually relevant brand program.

2) The independence of our publisher partners and of Federated Media as their newest portfolio company.

Federated Media pioneered content marketing and native advertising through strong partnerships with people like you. With this deal, we’re ready to define the next era for the independent web. Questions? Ideas? Praise? We’re all ears.

Thank you for your continued support,
John, Chris, Flora, Charles