Target: Cannella Response Television
Sponsors: Palladium Capital, VSS Structured Capital, ZM Capital
Financial Adviser: Seller: Petsky Prunier
In its first deal ever,
ZM Capital brought in
The sponsor firms, all based in New York, purchased privately-owned Cannella Response from its founder Frank Cannella, who is credited as being “The Father of the Infomercial Industry,” according to ZM Capital Managing Member Andrew Vogel. Management, which includes Cannella and CEO Robert Medved, has retained a significant stake. Financial terms of the transaction were not disclosed.
Despite its short history as a firm, ZM Capital won the deal in part because its managing directors had prior experience in the infomercial sector. The firm “went to school” on the direct response television industry through its involvement with Time Life, Vogel said. Parent company ZelnickMedia invested in Time Life in 2003 alongside
Cannella Response has mostly grown via acquisitions as the direct response television industry is still highly fragmented. Part of the motivation for the sale was that the company desired financial resources to enter new areas, Vogel said. On the organic front, Vogel said the company could expand into short-form infomercials. Currently, Cannella Response’s media sales consist of infomercials of 30 minutes in length or longer.
The company has a large footprint of incumbencies, or control of coveted commercial spots, which made it an attractive target, according to Vogel. The decline in consumer spending has caused a number of advertisers to reign in ad spending, which has worked in Cannella Response’s favor, giving it access to even more spots. ZM Capital also liked the broad audience and measurability of the infomercial business, Vogel added.