Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

BoomTown Says TechCrunch Likely Next to be Acquired

Posted by Tom Foremski - July 14, 2008

Kara Swisher got a great scoop last week with Guardian Media's $30m acquisition of PaidContent and now says that TechCrunch has been in talks with Time Warner's AOL.

So far Mike Arrington, the founder and major shareholder, has turned down $20m to $30m according to Ms Swisher's sources.

However, she says that a deal with AOL makes sense:

AOL would probably be a good home for a site like TechCrunch, since it has a blog focus from its own Switched site and sites it bought, like Engadget.

AOL acquired that popular gadget site in 2005 in the $25 million acquisition of Weblogs, which was founded by entrepreneur Jason Calacanis.

Calacanis, by the way, runs an annual tech conference with TechCrunch, now called TechCrunch50.

PaidContent's Rafat Ali Speaks! So, Here's Who's Next... | Kara Swisher | BoomTown | AllThingsD

Foremski's Take:

The valuation of TechCrunch is not comparable with that of Weblogs or PaidContent. TechCrunch should be valued at a much higher level especially compared with the extremely generous Weblogs valuation.

But should Mike Arrington take the money and run anyway? Valuations of online news sites appear to be trending downwards. Weblogs valuation was very very good, PaidContent, which has much higher revenues than Weblogs had, has a comparably poorer valuation.

There are signs that revenues for online news sites are under pressure. Gawker Media, for example, recently cut pay rates for its writers. [Gawker Media cuts payrates... Again! : The Blog Herald]

Also, Mike Arrington has spoken about plans for TechCrunch to be the acquirer of other online news sites and to take on CBS's CNET. Taking $30m and becoming part of AOL would be anathema for Mr Arrington, even if the deal were sweetened.

On another note, it's a shame that Kara Swisher and colleague Walt Mossberg didn't have the courage to strike out on their own with AllThingsD.com. They have built up an excellent site but it is wholly owned by Dow Jones, publisher of the Wall Street Journal.

Maybe, AOL would have been bidding $20m to $30m for AllThingsD by now, instead of TechCrunch.

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