About a week ago I wrote a post on blogs as M&A candidates. I was responding in part to an article in the Mergers & Acquisitions Journal that included a number of quotes from Seth Alpert suggesting that blogs were riskier than traditional media companies. I'm glad that in that same article, I was quoted saying "investment in the space should be a no-brainer".
Fast forward a week and look at the news. Yesterday, we had CBS acquiring CNET for $1.8 billion (wish I could write that with a Dr. Evil sounding "one beeelion"). Sort of like a Triassic Period dinosaur acquiring a wooly mammoth. CNET's not quite as old as CBS, but it's proven to be about as nimble.
Meanwhile, late this afternoon, Mashable broke the news that Conde Nast's Wired division was acquiring Ars Technica. That's right, a traditional publisher acquiring a blog. Surely that must be a mistake, as all the experts indicated that blogs weren't legitimate acquisition targets. Perhaps the Conde Nast people just didn't read enough to learn what a horrible mistake they were making.
Or, perhaps, the team at Conde Nast reads their own stuff (or eats their own dog food, if you prefer). In particular, the blogonomics posts from Felix Salmon, blogger for Conde Nast Portfolio's Market Movers blog. Conde Nast did not disclose the acquisition price, but it was rumored to be for $25 million. If the figure is correct, that's a $10 million premium over the $15 million valuation assigned to Ars Technica by 24/7 Wall Street's Doug McIntyre. And, it's about $1.775 billion less than CNET cost. With a reported 4.5 million monthly uniques, it seems to me that Conde Nast has gotten itself a pretty nice property which complements Wired well and should yield some nice CPMs as a package sold by the CondeNet sales force.
This should also be good news for the other blogs on Doug's list including Gawker, HuffPost, TechCrunch and others, as I believe this may kick off a small flurry of similar deals.
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