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Old 02-18-2005, 01:37 AM   #1
Larwee

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Default New York Times buys about.com

The price is 410 million dollars. Some of us are surprised that the buyer is the New York Times. Many thought it would be America Online, Google, Ask Jeeves or Yahoo. Those were the others who put in bids to buy about.com but the New York Times gets it.

Details in article below.
Quote:
NYT to buy About.Com for $410 million

The New York Times has more than 40 web sites, including the NYTimes.Com.

The New York Times Co. said it will buy online information portal About.Com for $410 million from publisher Primedia Inc. as it looks for new ways to build advertising revenue over the Internet.

The Times Co., whose newspapers include The New York Times and The Boston Globe, yesterday said it will expand About.Com's content and visibility and use the site to market its products and those of advertisers.

Primedia bought About.Com for $690 million in stock in late 2000, as it worked to meld its traditional publishing business with online media. But the publisher struggled to steer About.Com through the Internet downturn and noted yesterday that the portal is ''completely distinct'' from its other Web sites.

About.Com provides consumers who search its database with information from expert ''guides'' on topics including health, finances, food, and travel.

The New York Times Co. Said About.Com would not start adding to its earnings until 2007. The company said that for tax purposes, it plans to treat the acquisition similar to an asset purchase, leading to tax deductions worth over $80 million.

The New York Times has more than 40 web sites, including the NYTimes.Com.

http://www.deccanherald.com/deccanhe...182005/i17.asp

Last edited by Larwee; 02-18-2005 at 01:38 AM.
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Old 02-18-2005, 01:56 AM   #2
georgec
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They paid either 23 or 26 times About.com's yearly revenues (can't remember which). I'm not sure that's sound, but I definitely think the general formula of paying 2 years a site's worth for acquiring it is out of whack. It should be higher, at least 3 or 4 years, especially for content sites.
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Old 02-18-2005, 03:18 AM   #3
Larwee

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georgec, according to an article in Mediaweek it was ten (10) times 2004 revenues.

Here is that section:
Quote:
Today's acquisition seems to indicates that the company sees potential for About.com to reap further benefits from the current online advertising resurgence. Primedia claims that the $410 million dollar purchase price is 10 times that of About, Inc.'s 2004 revenues

Last edited by Larwee; 02-18-2005 at 03:20 AM.
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Old 02-18-2005, 07:15 PM   #4
georgec
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Hmm I gather the article I saw referred to About.com's yearly net then after cost, since based on News.com's article:
Quote:
The Times Co. said it paid a multiple of 23 times About.com's estimated 2005 earnings before interest, taxes, depreciation and amortization.
http://news.com.com/N.Y.+Times+to+bu...3-5581343.html

Last edited by georgec; 02-18-2005 at 07:17 PM.
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Old 02-18-2005, 07:44 PM   #5
Larwee

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georgec, it looks as if one is for total revenue and the other is for profit. Also one is for what happened in 2004 and the other is for a prediction of what is expected for 2005.

I remember seeing somewhere that it was about 29 times the 2004 profit.

No matter what year or what it is associated with, it was still a fairly high multiple.
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Old 02-18-2005, 11:09 PM   #6
deleon
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Is really surprise from NYT! I think what Yahoo! will be a owner of About.com
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Old 02-19-2005, 04:14 AM   #7
Czar

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deleon, it seems that NY Times' winning bid came as a surprise to many in this community. For reference, discussion about an earlier article that announced the pending sale of About.com may be found here:
http://www.geekvillage.com/forums/sh...threadid=26606

The price paid seems reasonable. An effective P/E ratio of 23 is fairly modest as far as ad-driven interactive companies are concerned. That's less than JupiterMedia/Internet.com's current trading range, less than Amazon, DoubleClick and Ask Jeeves, plus much, much less than CNET, DarkBlueSea, Google and Yahoo.

As long as NY Times are able to effectively leverage their advertising sales expertise and find some synergies between About and their existing forays into the interactive field, they should be able to enhance the property's profitability in 2006.
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