Dec 9, 2023 - Business

Exclusive: Crypto media site Decrypt merges with decentralized media firm Rug Radio

Illustration of a grid of coins in a Pop Art style.

Illustration: Shoshana Gordon/Axios

Decrypt, the news company that covers crypto and web3, has signed a letter of intent to merge with Rug Radio, a decentralized media company for web3 creators, executives told Axios.

The big picture: The merger marks the third major crypto media deal in the past month.

  • The Block, a crypto media outlet, sold a majority stake to Singaporean venture capital firm Foresight Ventures last month in a deal valuing the company at $70 million.
  • CoinDesk, the crypto news outlet that broke the story that led to the fall of crypto exchange FTX and its founder Sam Bankman-Fried, sold to a crypto exchange run by former New York Stock Exchange President Tom Farley last month.

Why it matters: The deal brings Decrypt further into the web3 ecosystem and gives Rug Radio and its ad partners closer proximity to the journalism brand and access to wider distribution.

Catch up quick: Decrypt was formed with seed funding from ConsenSys Mesh, a blockchain startup incubator, in 2018. It spun out from ConsenSys Mesh after raising $10 million in 2022.

  • In an interview, ConsenSys Mesh founder Joseph Lubin — who is also the co-founder of Ethereum — said his team has been pushing Decrypt to edge further into the web3 ecosystem.
  • “Marrying these these two forces — a distribution media company that's doing well but isn't deeply native to web3, and a leading edge web3 group — that's the ethos of what's happening,” he said.

Details: The two firms will combine to form a new, yet-to-be-named holding company, under which both firms will retain their branding and independence.

  • The holding company will be chaired by Josh Quittner, a longtime journalist and the current CEO of Decrypt.
  • Rug Radio’s current co-CEOs, Loxley Fernandes and founder Farokh Sarmad, will become CEO and president of the new holding company, respectively.
  • Investors in Decrypt and Rug Radio will retain stakes in the new holding company.
  • "It's safe to say that it was a merger of equals," Fernandes said.

How it works: Decrypt will be able to tap into Rug Radio’s creator community as it looks to expand into new coverage areas, like longevity and emerging technology/artificial intelligence, Quittner said.

  • Rug Radio, which is known primarily for its creators' live audio podcasts and video content, will gain access to further distribution across Decrypt's website for creators that want to explore text.
  • "We think what we're able to accomplish here is one plus one equals three kind of a deal," Quittner said. “Our companies are incredibly complimentary.”
  • While the two companies will operate independently, they plan to partner on advertising deals that could bolster both businesses.
  • "We believe we can help Decrypt adopt some more innovative revenue models," Fernandes said. Rug Radio uses web3 tools to facilitate unique branded content deals between creators and advertisers.

By the numbers: Rug Radio currently employs 12 full-time employees while Decrypt employs 22. All employees will remain with both firms after the close of the transaction.

  • Rug Radio makes money partnering creators with advertisers. The company keeps 25% of transactions, while creators pocket the remainder. In 2023 Fernandes says the firm projects $3 million in revenue. It plans to break even next year.
  • Decrypt also earns about $3 million in annual revenue, per Quittner. It makes money selling advertising against its web3 journalism content.

Zoom out: Part of the allure of web3 for creators and journalists is that it's designed to deliver more rewards to people who make content and users that engage with it.

  • "Almost everybody brings value back to one another," Sarmad said.
  • To facilitate these types of equitable transactions, the new holding company plans to exclusively partner with Arbitrum, a company that supports tech for micro-transactions that are built on top of blockchain systems.

What’s next: Executives say they are targeting early 2024 to close the deal. They do not anticipate that the deal will require regulatory approval.

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