Thursday, February 17, 2005

It's 'About' time at the New York Times

With the New York Times planned acquisition of About.Com, it's now clear the top newspaper companies recognize the need to diversify more aggressively into new media.

Writing the check is relatively easy. The hard part will be making the deals play -- and pay.

The purchase of About.Com for $410 million, or 59% of the price paid by seller Primedia in go-go '00, marks the third acquisition this year of a major Internet title by an old-line publishing company. Earlier, Dow Jones bought Marketwatch and the Washington Post acquired Slate, as detailed in this roundup.

Each of these transactions should deliver not only audience and advertising synergies, but also the much-needed Net knowhow resident in the acquired teams (so long as they are not pruned too heavily to pay for the acquisitions).

It was clearly logical for Dow Jones to buy Marketwatch, as they both cater to similar audiences and ad markets. Slate comports comfortably with the WashPost-Newsweek weltanschauung. But the rationale for the About deal, while a colorable case, is a little less forthright.

The About-NYT merger is explained in the Times as follows:
By adding About's 22 million monthly users to the Times Company's 13 million monthly users -- from the New York Times, the Boston Globe and more than 40 other web sites -- the company...would have the 12th-largest presence on the Internet. "This scale is important as content companies compete for market share in readership and advertising," said Martin A. Nisenholtz, named by the Times
Company yesterday as senior vice president for digital operations.
As further reported by the Times itself, however, the demographics and business models of About and the NYT sites are significantly different, making it questionable as to whether their audiences and advertisers really will cross-pollinate.

The About crowd is younger and less wealthy than the visitors to the other NYT sites and there is little audience overlap between the two properties, according to the Times. If you believe the glass is half full, then you will see this as a positive; if you are not so inclined, you won't.

One indisputable plus is that About has built its business on cost-per-click advertising, where marketers buy results, not bellybuttons. The Times, like all newspapers, needs to migrate ASAP to pay-for-performance advertising. About's ability to generate $40 million in revenues will provide valuable expertise to the Times, even if it only contributes 1% to the mothership's top line.

As either Lao-tzu or Yogi Berra once said, the journey of a thousand miles begins with the first step. That seems About right.


Blogger Newsosaur said...

Big-time oops. In a senior moment, I originally said WaPo bought Salon, not Slate. But it indeed was Slate. Thanks, Brian.

11:01 PM  

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