Both AllThingsD and Reuters have reported a deal in the works, and we have now confirmed with a source very close to the situation that IAC is buying About.com from the New York Times Company for an all-cash sum in the region of $300 million. TechCrunch has also learned that the news is due to be made official either later tonight or tomorrow morning.
The source also confirmed that although Answers.com had also been interested in the information portal, its offer — reportedly valued at $270 million — was in debt and equity in Answers.com.
Whether it goes for $270 million or $300 million, it’s a discount on the $410 million the NYT paid for the site in 2005.
Alexa ranks About.com as number 37 in the U.S. in terms of traffic, and 80 worldwide. Its pre-Demand Media approach to acquiring content for low prices spawned some 900 subject sites with general interest information on topics like regional foods, parenting and technology. In that, it served as a counterbalance to the New York Times itself both in substance and in business model — the idea behind About.com being very high traffic and advertising sold against that.
However, whether it’s down to people’s online preferences (we have a million more places to get recipes for Red Velvet Cake now, although About.com’s is pretty good; and Wikipedia has become the default for so much general info) or Google’s search algorithm changes, traffic at the site ain’t what it used to be. In the last quarter, ad revenues were down nearly 9% to $25 million; operating costs were up by some 15% to $15.2 million; and the site had an operating loss of $187 million. In its quarterly earnings in July, the NYT wrote down the value of About.com by $195 million.
But if About.com’s declining traffic seemed to make the site less and less a good fit for the NYT, you can see how it would make more sense to have a home at IAC, which already owns a number of properties that also function on a similar business model. IAC can potentiall pool its resources together to bring down some costs on the site, and About.com would become another outlet for the advertising network that runs across the rest of the IAC portfolio.
