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The New York Times Co. on Thursday said it will buy online information portal About.com for $410 million from publisher Primedia Inc. as it looks for new ways to advertise itself online.
Good to see the traditional media taking a stab at new media promotion methods. It'll be interesting to see what they do with it.
The Times Co. said it paid a multiple of 23 times About.com's estimated 2005 earnings before interest, taxes, depreciation and amortization.
23 times times EBITA? That's a brave move when you think that if they are going to try to use about.com to promote it's businesses, it's a new step for them.
So let's make a rough stab at full year revenues (which are announced at the end of February). For the purposes of this exercise we'll pencil in $730m sales for Primedia's Enthusiast Media division. Now let's assume that online revenues accounted for six per cent of turnover. That comes in at $43.8m. But don't forget that Primedia has other online properties as well as About.com - websites which accompany its many print publications. So it looks like NYTimes is paying as much as 10x revenues for About.com.
From the Register:
Certainly, orkut and googlegroups kind of fall into the categories of content, but about.com is on a different level.
So this appears to signal a change in focus for Google away from content organization to content provider. This has been Google's disadvantage and Yahoo's advantage when selling advertising because Yahoo can show movie trailers, flash animations, whatever it wants wherever it wants. Google is stuck with those little pink boxes. :( Must give Google's Sale Dev Team headaches to see big advertisers walk away into Yahoo's embrace.
Yahoo is moving big time into content development and presentation. Might be this is a flicker of a broadened focus at Google in the future? Or was it a ploy to foil Yahoo's purchase, or could it have been a half hearted attempt to acquire some content?
Certainly there's an argument that since Google has such a large slice of the PPC market, developing it's own content to promote their ads on is a logical step, but I personally believe a site like about.com would be stifled under the Google structure.
On the other hand, a content developed like NYT would be able to give about.com a huge push. How many years of content about specific subjects do they have? Imagine searching for, say, Nigeria, and getting not only a page about Nigeria now, but NYT stories about Nigeria for it's entire history, plus plugins to hotels, flights, travel books, etc, etc (and anti fraud campaigns as well ;)).
Googles strength lies in supplying the links and the audience, not the destination.
The price was silly but it might have made a good acquisition for Google at, perhaps, half that figure.
I don't understand how the NYT can justify that kind of money.
$410 million for SEO? I'll bet they could hire Marshall Simmonds, About's director of search, for a fraction of that. Marshall would could buy up his home town in Oregon and appoint himself mayor, and the NYT would have $400 million left over to spend on developing real Web content.
See the story at:
(By the way, I can't take credit for finding this; I learned about it from a fellow ex-guide at About.com.)
On a related note, does anyone ever visit About.com through the home page? Or do they, like me, just stumble on to deep pages through Google?