NEW YORK—Famous media mogul Barry Diller is expanding his media empire. The 70 year-old chairman and Senior Executive of IAC/InterActiveCorp announced Sunday that he successfully acquired The New York Times’ About.com division for $300 million in cash. IAC trumped an earlier bid from Answers.com, which was valued at $270 million and would not have been all cash, according to an unnamed source cited on Techcrunch.com. About.com aims to provide know-how about a host of day-to-day issues such as cooking and personal finance through content provided by paid freelance writers.
New York Times chairman Arthur Sulzberger Jr. said in a press release that About.com had been a “strong contributor” but that “this sale will allow the Times Company to focus on the development and growth of our core brands locally, nationally and on a global scale.”
The publisher, which lost $88 million in the recent quarter, has already sold other divisions such as its stake in Fendway Sports Group—the owner of the Boston Red Sox—for $93 million and its regional newspaper division for $143 million.
The company is retaining core newspapers such as the International Herald Tribune, The Boston Globe and the Worcester Telegram & Gazette newspapers. The New York Times acquired About.com in 2005 for $410 million in an effort to diversify its advertisement revenues. Ultimately, that strategy did not pay off, and the Times had to take an after-tax charge of $126 million last quarter to write down the value of About.com. Techcrunch.com cites a change in Google algorithms as a critical factor that led to reduced traffic on About.com.
While The New York Times is struggling financially and needs to restructure, business at IAC could not be better. Revenues were up 40 percent year over year during the last quarter ending in June. Net income was $43 million in June and the company can afford the all cash transaction as its balance sheet sports $807 million in cash and near cash equivalent items.
IAC, which owns over 50 online brands in 40 countries, plans to operate About.com as an independent entity but will strive to generate synergies with its own question answering focused Web search engine Ask.com. “This is a rare merger with true bilateral synergies,” said Joey Levin, CEO of IAC Search & Applications in a press release. “On the one hand, the Ask.com search and content business has generated exceptional revenue and profit growth by marketing and distributing a quality consumer search and Q&A experience, and About provides Ask with a tremendous amount of quality content to further enhance that experience and the credibility of the Ask brand.”
The deal is expected to close in the coming weeks. Despite the wealth of content on both sites, however, there was one question neither could answer: “Will the merger between Ask.com and About.com pay off?”
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