About.com is killing The New York Times, yet Barry Diller, head of IAC just outbid Answers.com with a $300 million offer for a website that often muddles our Google search results, yet looks so, so not authoritative. 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. IAC owns a lot of these types of "informational websites," as The New York Times's Amy Chozick puts it, and About.com would fit right in with Dictionary.com, Ask.com, Reference.com, ConsumerSearch.com, and CalorieCount.com. Diller has proven he knows how to make money off these sites, even in the new search engine landscape. Last quarter, IAC reporter a 46 percent jump in revenue, bringing in $348.8 million last quarter, Bloomberg's Sarah Frier notes.
A question and answer empire. Diller plans on combining Ask.com and About.com. "The idea would be to leverage the content served up on About.com to answer questions users pose on Ask.com," explain Reuters' Peter Lauria and Jennifer Saba, who first reported the news. Right now Ask has an informal message board situation, where someone asks something like "Why do certain smells cause us to gag?" and commenters answer. About would add a lot of authority and real information to the site. Though About's font and stock photos make it look like an eighth grader was involved in the content creation, the Times Company pays editorial staffers to write the content, making it a more legitimate source than random users on a message board.
It's actually a bargain. The Times Company paid $410 million for the website in 2005. Though it wrote down the value of the site at $195 million last month, a source tells The Daily Beast (which is also owned by Diller's IAC) "there are still interested buyers who feel that the $280 million price is low and can be easily matched."
Diller has the money. IAC has about $1 billion of cash and cash equivalents, note Lauria and Saba. "IAC could easily raise its current offer should a bidding war with Answers.com or another company emerge," they write. And, as surprising as that may seem, we might see a bidding war for the site that the Times so badly wants to offload. At least AdWeek's Charlie Warzel hopes that will happen to "make things interesting."
This article is from the archive of our partner The Wire.
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