If Rupert Murdoch prevails in his quest for Dow Jones, he will kill many birds with $5B stones. He’ll have:
- acquired the strongest brand in the world of finance (no disrespect intended to either Financial Times or The Economist).
- strengthened his hand against GE’s CNBC.
- won over the largest base of paid subscribers of any offline publication online.
- managed to win over all of the naysayers, after a combination of players sought to derail his plans to secure the sought after asset.
But, if he does not win over the Bancrofts, without whom the DJ deal will not materialize, then he can look for many likely suitors. Apparently, Mr. Murdoch is hunting for digital deals, according to a story in the FT.com, owned by Pearson, also in the running for DJ. This only means that Murdoch’s lieutenants are working overtime this weekend to scour the Web for opportunities, and since some of his lieutenants were so cordial with yours truly when I left his firm, here’s a list of potential players that he can make a run for, some of the market cap figures are outdated (this is from the Gobble or be Gobbled post from a month ago), but most of the revenue, income figures are relevant and most, if not all of the firms listed, remain in play.
Incidentally, some of these are great picks:
1. Napster + MySpace = wonderful fit. Ironic since News Corp. is one of the few old media (can we still call NWS an old media firm?) with no music label etc., this would be a great match.
2. Audible + Harper Collins = intriguing to consider.
3. Netflix’s Audience + IGN’s Digital Distribution = a lot of strategic value. I don’t know how much Netflix is positioning itself for digital distribution, but if my days at IGN remind me of anything, it’s that the technology IGN bought from GameSpy in terms of digital distribution could have a considerable value unlocked if unleashed over Netflix’ audience.
4. Looksmart’s Australian fit, if nothing else, deserves a conversation.
5. Answers.com is a good match, for Answers.com, more than anything else. Allow me to explain, it’s a great tool, but since it gets the bulk of its traffic from Google, by way of Google’s upper-right link on all of its search results page, any sale of Answers.com means the risk of Google cutting it off, but since Google is paying $900M for News Corp.’s FIM’s search business, Google would probably welcome Answers.com becoming a part of FIM.
6. FT.com talks about Valueclick, but at $3B it’s pricey. Also, what was Strategic Data bought for, again?
Going up that list…
7. CNET + IGN would be a bold and brash move. The FTC probably won’t know what it’s all about, but that would corner the video game market (CNET owns Gamespot; IGN owns Gamespy and, well, IGN).
8. TheStreet.com could be helpful in Murdoch’s battle against CNBC, though a few years ago FOX had a lawsuit against Cramer (or the other way around). Of course, CNBC hosts Cramer’s show. My gut is that CNBC or News Corp. might eventually buy TSCM, anyway, but I don’t think there’s a major rush there either.
9. Last but not least, Roo Group is a major player in video, and News Corp. (Jeremy Philips’ division, not FIM) owns 5% in options with the option to buy 5% more. I could see that being a shot in the arm of News Corp.’s online syndication video business.
Of course, that’s just a list of publicly traded firms, here are some highly sought after private firms.
Allrighty, I own shares in some of these companies, so please do your homework before thinking that I know what I’m talking about… I’m also, by way of Mojo Supreme, running a lot of operations that either work, compete etc., with these companies, so again, this is for entertainment purposes and not intended to be anything remotely resembling stock advice.
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WatchMojo NewsletterNick Denton’s Valleywag reported that his pseudo-competitor John Battelle’s Federated Media might have crossed the integrity line when he got Microsoft to pay for a bunch of his roster’s so-called elite, A-list bloggers to write something that supported MSFT’s “People Ready” campaign.
Dave “no nonsense” Winer chimes in here. By the time the dust settles, a lot more will. In the few minutes since I started writing this, CNET’s jumped on board, too.
I wasn’t gonna touch this initally. Then I said “who cares,” let’s piss of some more people. Also, by way of disclosure, I “know” some of the people MSFT has sponsored, “know” in the Web blogging sense.
Anyway, my take is simple: while this is certainly questionable and in my opinion, wrong, it comes with the terrain of a new medium, ie. blogs. Don’t get me wrong, I’m not prescribing to the Amanda Congdon school of “I’m not a journalist so I can do and say what I want.” Au contraire, I think this will eventually not pass at all, but as the medium grows, we’ll see this kind of stuff. Mainly, in 1, 3, 5 years, do you really think as many VCs will be blogging as do today? But more on that later.
On the one hand, I’m tired of the whole “conversational media” BS, cause blogs are anything but. Adding comments and being bombarded with spam comments is anything but conversational, it’s sycophantic in the sense that the blogger controls the conversation, thus making it a monologue, and in effect largely what traditional publications are.
The problem, of course, is that despite the obsession these days around blogs, be it Rafat Ali’s Content Next Media, Michael Arrington’s Tech Crunch, Om Malik’s GigaOmniMedia or Ashkan Karbasfrooshan’s Blogger Mojo - allrighty, scratch that last bit of shameless and delusional promotion - blog are not really publications in the strict sense that advertisers want.
Don’t get me wrong, some provide better food for thought and fodder than most venerable publications do, but they offer neither the:
- brand equity,
- audience demographic, nor
- reach
that advertisers like MSFT ask for. So savvy salesmen like John Battelle go in, pitch these “beyond the banner” ideas and elite A-list bloggers go along with it, because, well, they’re either inexperienced in traditional publishing, think they’re beyond traditional publishing rules or simply don’t see anything wrong with it. [Update: Battelle’s comments here].
Fred Wilson, I can imagine, sees nothing wrong with this because he pays his proceeds to charity. To him, the problem is yours, not his. [Update: See Fred’s comment and link to this post in the comments].
Richard McManus, who runs one of the more in-depth blogs and is a model for what blogging tools should be used for, probably could care less because his empire is growing and he welcomes the MSFT seal of approval. [Update: Read Richard’s two cents here].
Michael Arrington boasts about his conflicts of interest and this is probably on page 2 of his list of potential conflicts. [Update: just as I suspected, Arrington comes out gunning and throws a red herring at Valleywag, which makes you wonder about the validity of some of his earlier MSFT claims: “Take Time To Understand: Why Silverlight is Important“. Not surprisingly, notice how on his CrunchNotes post he suddenly calls the MSFT slogan “lame.” Class all the way. My beef with Arrington’s stance is this he’ll come out and say that he wants to be larger than CNET, implying he’s in the same category of publications etc., yet he wants to be evaluated based on a different set of rules. That’s utterly hypocritical and arrogant. When you scan the landscape of tech bloggers, you get a sense of who will stick around and be relevant in 1 or 5 years, and who won’t be. Judging by his reaction to this, you can imagine where I cast my vote on his legacy. Once in a while, humility goes a long way, but we’re wasting our breath here].
Paul Kedrosky, a very smart VC with a great concise blog’s tagline is Infectious Greed, so I doubt he cares much about our objection. [Update: Paul’s answer, here].
I am surprised to see Om Malik go along with this, with his B2.0 background and what not, I could see him passing but when someone comes to you as a writer and says MSFT wants to partner with you, how could you turn that down? Of course, he has VCs now with high expectations, and adding MSFT to his client list is too good to pass up. [Update: Om reacts in a classy way, as suspected, but we think he’s just taking it way too hard.]
Mainly, the point I’m making, is that this comes with the territory and new terrain they’re charting. We’re still experimenting with blogs, and while they’re not going to be much different than “traditional media” down the road, they are now.
Take me for example, if I’m going to write this story, I should technically email all of the parties involved and get their take (that’s what CNET, Winer and Denton, I presume did). But I can’t be bothered. I’m a PR spinster myself when I need to be, I don’t to hear such spinning from others. I’ve also worked as a VP of Sales and been in Battelle’s shoes and know it ain’t easy.
I worked for 7 years in ad sales and held some publishing and editorial duties and always sought to avoid any potential conflicts of interest, but with blogs, we sometimes think it’s different. Over time, it’s not different, and things like this to be done to incite (oh oh here I go) a conversation about whether or not it’s kosher.
Update added: All it would have required was for the bloggers to make a post on their blogs explaining what it was. It’s not, after all, like they were writing up posts about MSFT’s People Ready campaign… but once you write text for a client, you’re not really a publisher, you’re an ad agency.
While Ask.com has run some irreverent and in most people’s opinions, ineffective ads, it’s gotten people talking about what Ask.com should be stressing, effectively making the ad campaign effective, in a crazy way.
I really doubt that Battelle et al. thought this would get bloggers’ attention in a good way. Frankly, it makes me distance from MSFT, dislike Battelle’s tactic (note singular John) and distrust what the bloggers have to say.
But in the end, few of them actually blog because they need to, they blog because they like to, meaning that they really have no one to please but themselves.
All right, people, let’s move in… now we’re giving MSFT way too much credit, and promo.
Private equity firm Blackstone’s much ballyhoed IPO today made George W. Bush’s Yale classmate Stephen Schwarzman.
The party continues:
Not bad, not bad at all.
Related:
- Private Equity vs. Venture Capital - who’s stepping on who’s toes?
- If I had a Billion Dollars, I’d Build the Following Digital Conglomerate.
The Yahoo!/eBay merger has long been rumored and today gets another whirlwind, but because it’s so logical, we don’t think either side will have the common sense to pull it off. While it’s easy to mention a few of the obvious reasons for the deal: [Yahoo!’s enormous user base] x [eBay’s auction database + Paypal Platform] = Mucho Dinero… the main reasons for this deal are actually:
1 - the totally complementary and non-overlapping businesses: Yahoo! is an ad play, eBay is an e-Commerce play;
2 - the management fit: if you consider that over 50% of Yahoo!’s senior management has left and eBay is known for having a strong bench and as a result the new entity won’t have 2 Snr. VPs of everything;
then you have to ask why this deal won’t happen?
Can you imagine Sue Decker and Meg Whitman running two of the strongest brands in all of Silicon Valley?
Can you imagine a board that boasts both Pierre Omidyar and Jerry Yang?
That would definitely be something.
But back to our point, this deal would not be an acquisition, but rather a merger of equals and I don’t think Yahoo! shareholders would view this as a win.
A quick tale of the tape:
As you can see, the merged company would become a ferocious competitor to any company, be it Google, MSFT, IAC, News Corp.’s FIM or Time Warner’s AOL… but the problem is, shareholders of Yahoo! give up 54% of their company to own something that is still not guaranteed to boost shareholder value in the long-run. Bear in mind, for example, that eBay’s core transactional business is slowing and Paypal will be larger even by its own management’s admission.
And the merged entity is still half of Google’s market cap, though it would boast enough cash to start making more acquisitions, etc., if that was something they wanted to do.
The main strength is that Yahoo! is largely an advertising business, eBay is a transactional business, so the revenue streams would be diversified quite a bit but the P/E and P/S multiples might go down to due eBay’s slowing business.
I’m a Yahoo! shareholder and I’m not sure this would really work with most shareholders, who would probably prefer the immediate payoff of a $50B offer from MSFT.
This morning I woke up and got a bad feeling that we were back in crazy times. The WSJ ran a story about how Business.com was about to get the last laugh in a sale of the company for $300-400M. Insanity, I thought. After all, insanity means doing the same thing but expecting a different outcome. It’s a pillar of the current Administration, some would argue.
But what is different this time around, is that it’s not simply a URL that is being sold, there’s an actual business there.
After all, indeed when Business.com (the URL) was bought for $7.5M, the joke was that the site would not generate $7.5M in its lifetime to pay back for the purchase. Then again, the URL was bought at the tail-end of the first boom, which was subsequently followed by a period of anemic ad revenues and lukewarm digital prospects.
But because of that, search advertising took off, and with it did the value of generic URLs. We looked at this ecosystem way back, here. Business.com became a beneficiary both of direct navigation traffic and revenue but also built up its directory and pay-per-click business. It even raised $10M in financing. One would have thought: more madness!
But, to give credit where credit is due: the company today reports EBITDA of $15M, which would imply a 20 times P/E multiple if it got $300M and is looking for $300-400M in a sale. WSJ is running the story and seeing how DJ - parent of WSJ - is in the running, the entire thing is surreal, but then again, reading WSJ while Rupert-Gate is ongoing is even more surreal.
Mind you, at 20 times P/E, the deal would be “cheap” for Yahoo! and Google who trade at P/Es that are greater than that. It could also be interesting for MSFT who is desperate to gain traction in paid search. This could help them in a lucrative niche vertical that is not going to get smaller in 1, 2, 5, years. And, to boot, the same WSJ article states that Business.com’s traffic grew 50% in the first two quarters of 2007 year-over-year compared to 2006.
Now this could mean three things:
1 - The investors and founders have been at it for 5-7 years or so and want an exit, which is to be expected…
2 - But it could also be a hedge against the inflation in CPC prices in search advertising. We’re seeing a lot of advertising shy away from search advertising… and I personally think that at this rate, when it’s said and done, Google will own this market, if it does not already. Bottom line: sell high. I am not sure this is really the case, since paid search will continue to grow and remain the largest slice of the online ad pie, though it will grow slower than video and display ads.
3 - Old media is really looking for online growth and they will pay a premium whereas new media ones already in the space probably won’t. As a result, the company leaks this to WSJ.com, that gets WSJ and NYT excited which in turn make YHOO, MSFT and GOOG kick the tires to protect “their market” - i.e. search. Rupert Murdoch finds out there’s an auction going on and sends his men out to scope out the deal, too.
I just hope that bloggers, the mainstream media etc. do emphasize that there is a business here that’s for sale and not only a URL, otherwise we’re never going to hear the end of it.
Hands up, however, if you’ve never been to Business.com. Yeah, thought so. You can put your hands down. You too Mr. Murdoch.
Yes, I know, everything has a price. But, exactly: everything has a price.
Apparently, or should I say allegedly, GE thinks it’s worth it to pay Paris Hilton $1M for her first interview when she gets out of hail after 45 days.
Yet, it does not think it’s appropriate to spend $2B or so buying 40% of Dow Jones, publisher of Wall Street Journal and Barron’s. Mind you, Rupert Murdoch is trying to buy DJ to position these brands against GE’s CNBC.
That’s hot.
