30 August 2012

Answers About Ask

A few weeks ago, in It's All About Answers, I noted,

The New York Times Co. has agreed to sell its troubled online information service, About.com, to rival Answers.com for $270 million

Let's follow the evolution of that story since the initial report. Barry Diller's IAC offers $300 million for About.com:

IAC wants to combine About.com with Ask.com, which has undergone a strategy shift over the last two years from generic search engine to a question-and-answer style service. The idea would be to leverage the content served up on About.com to answer questions users pose on Ask.com. [reuters.com]

Why About.com May Be Worth $300 Million to Barry Diller:

We understand why the Times Company wants to get rid of the property. After a few years of revenue increases, Google went and changed its algorithm causing About to lose the clicks that once brought them over $100 million. Following these search changes, however, the company reported a 67 percent drop in revenue for the site earlier this year, after laying off a bunch of its staff about a year ago. It's about time for About to go. But, what does Diller want with it for all that money? Some theories:
* Diller knows how to make money from a site like About.com.
* A question and answer empire.
* It's actually a bargain.
* Diller has the money. [theatlanticwire.com]

It’s Ask.com and Answers.com Looking to Grab About.com:

It’s not the first time these two have circled the same website names. In 2007, Answers reached a deal for Lexico Publishing Group the company behind Dictionary.com, Thesaurus.com and Reference.com for $100 million. But that deal fell apart and in May 2008, Diller’s media giant swooped in with its own deal for the company. [wsj.com]

Barclays Sees Synergies In Potential IAC-About.com Deal:

[Barclays’ Mark May] notes that About.com generated $25 million in the second quarter. While that number was down year-over-year, it improved sequentially "as the business appears to have at least stabilized following the Google (GOOG) changes in 2011." He concludes: "Assuming modest growth and a 40% margin, we forecast $108mn in revenue and $43mn in EBITDA for About in CY13. A $300mn purchase price would equate to 7.0x CY13 EBITDA as compared to IAC’s current 6.6x." [blogs.barrons.com/techtraderdaily]

Times Co. Sells About.com for $300 Million:

IAC won out over Answers.com, which two weeks ago reached a preliminary agreement to buy the unit for $270 million. IAC is the owner of Ask.com, so the deal will fortify its presence in how-to web search. The deal is expected to close in several weeks, and the Times Co. will use the cash for "general corporate purposes," the company said. [wsj.com; comments]

Deal for About.com Fits Diller’s Strategy:

IAC is known for snapping up businesses that generate cash and fit nicely into the existing portfolio of brands. The About Group, owner of About.com, a popular advice site, checks each box here. While group’s profit shrank last year after Google tweaked its search algorithm, it still posted $41 million in profit. About.com also complements IAC’s Ask.com, a question-and-answers site that it purchased in 2005. [dealbook.nytimes.com]

Ask.com CEO Discusses About.com Acquisition:

(Q:) You've said that Ask.com has had its eyes on About.com for a long time. How did you finally come to the decision to buy it? (A:) For us it was about how do we get an answer to content that we can put on Ask that helps you get the whole picture of the story? When we do that, users love us and we have a lot of users. What we don't have is a lot of users who are coming back to us frequently. Our problem is getting people to come back more often, and it became very clear that content was the way to do that. High-quality content, not crap content farm stuff. We started then to look around for high-quality content, and of all the commercial content on the Web, About content is the best. It made a ton of sense to say, "Let's use this content on About and drive that back to Ask while using Ask's users to do the same for About's great stuff." [adweek.com]

If About.com is worth $300 million, what is Wikipedia worth?

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