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Vinco Ventures, which was poised to acquire the tabloid the National Enquirer earlier this year, as well as its sister publications Globe, National Examiner and the National Enquirer U.K., has in recent months become embroiled in a saga so sensational that it could have been plucked from the pages of the Enquirer itself.
Vinco Ventures initially sought to acquire the celebrity gossip titles in February through a joint venture for $100 million.
But by July, the deal had fallen apart, and a series of internal power struggles, lawsuits and executive arrests—including the incarceration of its one-time co-CEO, former MoviePass chairman Ted Farnsworth—has since consumed Vinco Ventures.
The resulting disarray has left the fate of the National Enquirer and its sister brands uncertain; they remain under the ownership of existing owners, a360 Media. The company did not respond to Adweek’s request for comment.
The dramatics surrounding the National Enquirer and its thwarted attempts to sell itself reflect both the challenging economics of digital media, as well as the bleak M&A landscape for the sector.
“The universe of buyers for digital media is smaller than it’s ever been, and the price of media assets has fallen dramatically,” said founder of The Rebooting Brian Morrissey. “When those factors come together, you open the door to an entirely new set of buyers.”
The almost-acquisition adds yet another salacious chapter to the story of the National Enquirer, whose last few years have been marked by controversy.
In 2018, its parent company was fined by the Federal Election Commission over a 2016 “catch and kill” scheme related to former President Donald Trump. In 2019, a360 Media tried to sell the National Enquirer to magazine distributor James Cohen for $100 million, but the deal never closed.
Bankruptcy and lawsuits at Vinco Ventures
After abandoning its attempt to acquire the National Enquirer in July, Vinco Ventures has struggled to remain operational, losing key executives, its status as a publicly traded company and the business of several of its portfolio companies, according to court documents and public filings.
In August, Farnsworth, the architect of the failed National Enquirer acquisition, was arrested in New York. He had been indicted by the SEC last November on charges stemming from his time at MoviePass, according to court documents.
Under his bail conditions, Farnsworth was forbidden to cross state lines without notifying his parole officer. After he traveled from New York to Florida in July, he was arrested and is now being held in a Miami detention center, according to prison records.
Representatives for Farnsworth did not respond to Adweek’s request for comment.
Tumbling share prices
Vinco Ventures has similarly struggled. In November, January and April, the company failed to submit financial records required from publicly traded firms, prompting warnings from Nasdaq that it was at risk of being delisted.
In June, three of its five board members abruptly resigned, and the company was delisted from the Nasdaq in July, according to SEC filings.
It can now be traded only over-the-counter, and its stock, which traded for $20 per share last September, is currently valued at less than $1. All regulatory information has been removed from the company website.
Collapsing assets
The company, which owned a roster of more than a dozen media, entertainment and technology firms, has also seen several of its assets collapse in recent months. Had Vinco Ventures succeeded in acquiring the National Enquirer, the publisher would have been a part of this portfolio.
Earlier this month, one of its portfolio companies, Lomotif, entered bankruptcy proceedings, according to court documents obtained by Adweek.
The Singaporean company, which launched in 2014, was acquired by Vinco Ventures for $125 million in February 2021 and positioned as a TikTok rival.
Neither the Lomotif app nor the website has worked for months, according to Shadwrick Vick, a retail investor who has filed a lawsuit against Farnsworth and other Vinco executives.
Companies ceasing operations
AdRizer, another Vinco Ventures portfolio company, also ceased operations this summer, according to a person familiar with the matter. Vinco Ventures acquired the ad monetization platform for $108 million in October 2021.
A third company, Mind Tank, filed a lawsuit against its portfolio peer AdRizer earlier this month, according to court documents obtained by Adweek.
Several of the remaining Vinco Ventures portfolio companies have simply continued operations despite a lack of communication from Vinco Ventures, according to the person.
While the company lists James Robertson and Chris Polimeni as executives on its website, neither they nor a company representative responded to Adweek’s requests for comment. It is unclear whether Vinco Ventures is currently an operational business.
Compounding the situation, a group of Vinco Ventures retail investors have brought a number of legal suits in Nevada against Farnsworth and other Vinco Ventures executives, led by Vick.
They allege, among other charges, that Farnsworth and Vinco Ventures have engaged in self-dealing and self-enrichment, diversion of assets and unlawful funding transactions.
“[Farnsworth] took the company down to zero while pocketing the profits,” Vick said. “The SEC caught wind of [MoviePass], and shareholders caught wind of this one. I think that there is still a chance that we could still wind this company back up.”
