The Onion seeks investors, hears offers for company

CHICAGO - The Onion Inc., the Chicago-based purveyor of fake news and entertainment websites, may really be for sale. Or not.
Responding to a report by Bloomberg that the company was exploring a possible sale, Steve Hannah, chief executive officer and minority owner of the Onion, sent employees a memo Friday outlining the “real story,” which he said was an investment-raising effort that has generated offers for the whole company.
In the memo, which was obtained by the Chicago Tribune, Hannah confirmed that the company has retained a financial adviser to seek investment capital. Hannah said the company has been “showered with inquiries from interested parties,” ranging from a “simple investment to a possible purchase” of the Onion.
“In the course of looking to raise money, our advisors got a lot of interest from both strategic media companies and private investment firms,” Hannah wrote. “Predictably, their interest ranged from making an investment in the Onion to acquisition of the company. This is the normal course of events in the capital-raising world.”
The Onion’s parent company has hired investment bank GCA Savvian, which it has worked with in the past, executives confirmed Friday. In the memo, Hannah said the Onion has had “various advisors helping us for most of the past 10 years.” The Bloomberg story follows news that Funny or Die, the comedy website started by Will Ferrell and Adam McKay and backed by Sequoia Capital, had hired an investment bank to explore sale opportunities.
Hannah said the Onion Inc., which has reinvented “America’s Finest News Source” as a diverse digital media company in recent years, is growing, but is looking for partners to accelerate its growth.
“It takes capital to grow a company and there is no better time to raise it than when your brand(s) and business is going strong,” Hannah said in the memo.
In addition to its namesake satirical website, the Onion portfolio includes entertainment website A.V. Club, Onion Labs and the recently launched ClickHole. In an email to the Tribune on Friday, Hannah said the digital-only company is growing and profitable.
“The last 18 months have been a transformative chapter in The Onion’s history. We went from being a traditional publishing company to an all-digital, all-day operation,” Hannah said in the email. “Our audience has grown impressively. Our revenues have done likewise. And our profitability has gone up and up.”
Founded in 1988 by students at the University of Wisconsin at Madison, the Onion grew to national prominence by parodying the gravitas of newspapers with satirical headlines and stories, such as “Drugs Win Drug War.” It staked out online turf in 1996 with the launch of TheOnion.com, sharing content between print and digital.
Current owners bought the Onion in 2001, led by money manager David Schafer. The editorial staff relocated to New York that year, leaving behind the corporate headquarters in Wisconsin. A former executive editor at the Milwaukee Journal, Hannah took the helm three years later.
Hannah moved the headquarters to Chicago in 2007, hoping to consolidate editorial and business operations there. That became an imperative during the Great Recession, when red ink forced the Onion to chart a new course - phasing out print operations and focusing on its websites.
The Onion relocated its editorial operations to Chicago in 2012.
The Onion newspaper ended its print run in December. In addition to its comedy websites, the Onion branched into advertising with the launch of Onion Labs in 2012. Onion Labs creates branded video content with the Onion’s comedic sensibility for a growing list of advertisers, according to executives.
“The building of Onion Labs, the development arm of the company, has been absolutely crucial to our success,” Hannah said in the email. “Labs has not only spurred development of new editorial products - like ClickHole, which has been a resounding success - but it has put our comedy and pop culture creative capabilities to work for a blue chip roster of brands.”
In the memo, Hannah said the Onion has had follow-up conversations with numerous parties in recent months, as the company looks for a partner “to fund new initiatives.” Whether that leads to an outright sale remains to be seen.
“This could be a good time for us to take on an investor - but it has to be the right one,” Hannah said in the memo.