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Updated: SnagFilms gets $10 million in Funding — and Bingham Ray

Updated: SnagFilms gets $10 million in Funding -- and Bingham Ray

SnagFilms has received $10 million in a financing round led by venture capital firm New Enterprises Associates and Comcast Interactive Capital, the investment arm of cable operator Comcast. Joining SnagFIlms is industry veteran Bingham Ray, who will serve as a consultant for the company.

SnagFilms, which currently distributes free, ad-supported titles from a library of over 2,000 nonfiction films, will use the funding to expand its distribution to include fictional and foreign-language titles. SnagFilms also intends to use the capital to expand its indieWIRE unit.

SnagFilms’ CEO Rick Allen said that the funding comes with a “sophisticated business model that runs through 2014. (It) shows where we expect growth to come by genre and by type of revenue, both ad supported and transactional, and calls out spending to get into new platforms and devices. The world is changing so rapidly, which is why we want these partners so we can continue to make decisions on the fly.”

Allen said Snag was “modestly profitable” and as such, didn’t need new funding. And although it could have raised this new round solely with its existing investors what was just as important as the money, Allen said, was working with players who could provide “the intersection of technology and film content.”

Said Allen, “As you look at who has the scale of operations and relationships and the raw resources, NEA has been doing consistent tech investments for three decades. Their more recent work on Groupon is known to us because Ted (Leonsis) is on the board of that company. We know the role they play with young tech companies in helping them grow into important companies very rapidly.”

As for Comcast: “We’ve known Comcast for a long time and I think they’re the most important media company in America right now. They have a structure and resources and an interest in independent programming. VOD offerings reflect one of the most exciting growth opportunities for filmmakers to reach a wider audience. We can help consumers discover undiscovered gems with knowledgeable POVs about independent film. It takes a very big company to be able to make that happen.”

Existing investors, who include SnagFilms founder Ted Leonsis and Steve Case, also participated in the financing round.

Going into Sundance, Allen said Snag’s discussions with filmmakers could include everything from outright acquisitions to hybrid distribution plans – and interesting films could include library titles. “It may take the form of discussions about purely digital distribution, combining other distribution plans, or planting the seed as they explore traditional opportunities. It’s not just the films in this year’s festival. Companies that have libraries of films — all of those conversations are important to us. I don’t define success as coming out with deals for one or more films. We want to understand how to take the tools we’ve developed and figure out how to take additional titles through those vehicles.”

[Editor’s Note: This article was updated from its original version.]

Allen says Snag’s acquisition strategy will lie in the balance between consumer choice and filmmaker support. “People want choice, filmmakers want a quality home. I don’t think we have to hit 2,000 narrative titles by a certain date. Whether it’s 2,000 titles in a year or three years is less important. Ted has a very clear view for Snag representing tens of thousands of titles and ultimately that’s what we want to be. I think the question is how fast we get there.”

In the next year, Allen expects both Snag and iW to “roughly double” in size. Toward that end, Snag and iW will also be moving to larger offices in New York and exploring options for an expanded base in Los Angeles.

“indieWIRE has been a central part of our strategy from the very beginning,” he said. “We regard indieWIRE as an independent success, (but) we do see the two parts of our companies growing together. Having this investment opens growth opportunities for indieWIRE — writing in greater depth about the indie film sector, expanding our blog network and writing about independent film for the audience of fans, filmmakers and the industry. That’s what iW’s done for more than 14 years and is what we want to see extended.”

This includes making the content more accessible through devices such as the iPad and utilizing platforms afforded by the Comcast partnership. “We want to take the great analysis and knowledge and make them available through other media,” Allen said. “This includes working with Comcast to talk to their audience about great films, whether or not it’s distributed by Snag. Snag benefits as the indie sector strengthens. indieWIRE has had a role in curating Hulu’s doc channel — some of which Snag has something to do with, others in which Snag has nothing to do with.”

Allen said that Comcast has no operational interest in either SnagFilms or indieWIRE; similarly, he said SnagFilms doesn’t provide editorial direction for iW. Comcast is an investment and strategic partner. They don’t have or seek any operational involvement,” he said. “And we realized from the beginning, when we sought to purchase indieWIRE, that it’s a journalistic entity and its independence, both real and perceived, is vital. “

“We think the combination (of Snag and iW) makes both pieces stronger because it gives indieWIRE access to broader resources and it gives them the ability to understand how the business is changing by watching one of them close at hand,” he said. “We’re always very mindful to tell readers about the ownership. We have no intention of telling indieWIRE what to cover, or how to cover it. If anything, our approach has been to greater diversity and independence – that’s what the blog network is about. Much of the coverage we feature is being by directed by the blog network, which has greater independence from indieWIRE, much less from Snag.”

Finally, Allen acknowledges that “it is always important” to have an exit strategy, but the specific subject hasn’t come up in SnagFilms’ discussions with NEA and Comcast. “That may strain credulity, but we all like the business we’re building and when you’re building an exciting and large business, there’s a lot of ways that can pay off.” He points to Groupon, which rejected an enormous bid from Google and “now they’re most likely to go public. If you build a really great company, there’s so many ways investors can be rewarded.”

Joining SnagFilms’ board of directors are NEA managing general partner Peter Barris, whose investments include serving on the board of Groupon as its first VC investor, and David Horowitz, managing director of Comcast Interactive Capital. The other members are Leonsis, Allen, Jean Case, Tige Savage, Ted Pedas, Alberto Ibargüen and Miles Gilburne.

(Note: SnagFilms is the parent company of indieWIRE.)

The full release follows:

Washington D.C.–January 17, 2011 – SnagFilms announced today it has received $10 million in growth capital from new investors New Enterprise Associates (NEA) and Comcast Interactive Capital (CIC). Existing investors, including Ted Leonsis (SnagFilms’ Founder) and Steve Case, also participated. The financing will be used to expand its distribution of independent films–including, for the first time, fictional independent releases–across all digital platforms and devices, and on a global basis.

SnagFilms is a leader in distributing free, ad-supported titles from a library of over 2,000 non-fiction films. Last year, SnagFilms entered the transactional world with launches of video on demand channels on Comcast and Verizon FiOS, as well as titles for sale through the Apple’s iTunes store. Earlier this month, SnagFilms debuted its iPad application with the largest collection of award-winning U.S. films offered free to iPad users.

“As a profitable company with substantial private investors, SnagFilms didn’t need to raise outside capital,” said company founder Ted Leonsis. “However, we saw overwhelming strategic value in involving NEA, a pioneer and leading venture capital firm, and CIC, the investment arm of Comcast. SnagFilms is very well-financed and uniquely positioned now to bring the full array of independent films–fiction and non-fiction, U.S. and foreign–to global audiences on all platforms and devices. We’ve amassed a library of 2,000 documentaries since our launch, and we’re now building distribution opportunities for tens of thousands of independent films in both categories. That’s great news for film fans and for filmmakers.”

“SnagFilms is perfectly positioned to fuse technology and content in a manner that has marked many of the transformational industry leaders we have helped build in the past,” said NEA Managing General Partner Peter Barris, who joins the Company’s Board of Directors. “New devices and digital platforms will allow consumers unprecedented access to quality content, and SnagFilms will be there to delight them. We are pleased to be able to invest in SnagFilms at this time, and to help them add fictional indie films to their expertise with documentaries–and to take both genres to the full swath of digital platforms and devices.” Among many other investments, Barris serves on the board of Groupon as its first VC investor.

“We are excited about the new opportunities SnagFilms creates, especially for independent filmmakers who historically could not get distribution,” said David Horowitz, Managing Director of Comcast Interactive Capital. “This investment reflects our view that consumers are demanding a diverse selection of high-quality content that can be watched on any platform or device.”

SnagFilms also announced that industry veteran Bingham Ray will join the Company to help guide its entry into distribution of fictional narrative and foreign-produced independent films. Ray, former President of United Artists, October Films and Kimmel Entertainment, and honored for Lifetime Achievement by the Gotham Awards, has deep experience in the acquisition, marketing and distribution of motion pictures, including “Hotel Rwanda,” “Bowling for Columbine,” “Secrets & Lies,” “War Room,” “High Art,” “Last Days” and “Breaking the Waves.”

“Bingham has been an advocate for filmmakers throughout his career,” noted Rick Allen, SnagFilms CEO. “His record of successful distribution on traditional platforms provides a strategic sense and depth of relationships that will be invaluable as we extend our model into a broader array of films. Bingham will be a key member of our large presence at the Sundance Film Festival this week and beyond.”

“I’ve been a big fan of SnagFilms from their earliest days, and am truly thrilled to be part of the team as they expand the service, bringing more filmmakers to bigger audiences on a wider array of platforms,” said Ray. “This is the future of our business.”

“SnagFilms plus Bingham Ray is a great combination,” said Tom Bernard, co-president and co-founder of Sony Pictures Classics. “Bingham knows the indie world as well as anyone alive and is admired for his experience and for always delivering for filmmakers. He’ll be a big asset to SnagFilms’ expansion.”

In addition, SnagFilms intends to use its new growth capital to expand its indieWIRE unit, now in its 15th year as the leading web source of news, reviews and analysis of independent film.
“indieWIRE’s traffic is now ten times what it was when we purchased it two and a half years ago,” Allen said. “Before the Academy Awards are announced later this month, you’ll see new editor-in-chief Dana Harris add ongoing features to our coverage of the indie world, and exciting new blogs to our Network, like the recently-added blog The Playlist.”

About SnagFilms

SnagFilms features free ad-supported viewing of more than 2,000 award-winning titles from some of the greatest names in documentary film. All films are shareable across the web. Since its launch in July 2008, SnagFilms’ library has been featured on over 2 billion web pageviews, with more than 325 million minutes of SnagFilms titles streamed across over more than 100,000 affiliated sites and webpages, including through partners such as Aol, Comcast, Hulu, the Starbucks Digital Network, IMDb, the Miami Herald, hundreds of non-profits, special interest sites and blogs. SnagFilms also offers selected titles via VOD (with Comcast and FiOS), on iTunes and through a new free application for the iPad.

OVGuide has twice named SnagFilms a Top Site and MovieMaker Magazine named SnagFilms to its annual list of “50 Best Websites for Moviemakers.”

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