Tuesday, February 8, 2005

It's About(.com) Advertising Real Estate and Interactive Content

The New York Times reports [reg. req.] today that Primedia's About.com suite of web sites is for sale. Primedia, which is owned by Kohlberg Kravis Roberts (KKR), bought About.com in the waning period of the dotcom boom in October 2000 for $690 million in stock. Today, the company is expected to sell for between $350 and $500 million.

About.com was initially envisioned as the ready-built Web strategy for Primedia. Primedia publications would be advertised and cross-sold across a wide swath of About.com consumer guides. Primedia also had the Sprinks advertising network to optimize placement of the ads in context. But, the forced synergies between Primedia pubs and About.com sites didn't pan out. When Google bought the Sprinks ad technology and network from Primedia in 2003, it also acquired rights to place ads on About.com sites. Maybe those rights will expire soon. If not, it is unlikely that Yahoo! or other ad-dependent search engines will be top bidders.

At this point, About.com is most attractive as a collection of communities web sites that in the whole represents a huge lot of real estate on which to place online ads. But, About.com is also a content creator and its community web sites most recently have been repositioned as blogs. The timing is great for Primedia to be putting About.com up for sale. Blogs are the hot new form of interactive community-based content. High growth in online advertising is leading to a 2005-style dotcom boom. And, as we predicted in our Content Industry Outlook 2005, "There will be a slew of mergers, acquisitions, divestitures, and IPOs...much of [the activity] precipitated by private equity firms." But, it's not a slam-dunk to guess who will purchase About.com. It would be a major departure for Google to purchase content sites. Yahoo! or AOL seem to be more likely candidates; but there's that sticky issue of Google having rights to place AdSense ads on the About.com network. Then there's the perhaps more interesting question: what will Primedia/KKR do with the proceeds?
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