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

Analysis: AllThingsD At Crossroads - Founding Team Wants Buyout From Dow Jones

Posted by Tom Foremski - August 27, 2013

JP Mangalindan and Dan Primack at Fortune have produced an excellent article on tech gadget and news site AllThingsD and the discussions between owner Dow Jones and the founding team of Walt Mossberg and Kara Swisher.

Here are the main points: AllThingsD nears split with Dow Jones - Fortune

- Dow Jones owns AllThingsD but the contract with Walt Mossberg and Kara Swisher will expire at the end of this year. The two co-executive editors are trying to gain ownership of the property.

AllThingsD is working with investment bank Code Advisors to find outside investors at an enterprise value that could exceed the $25 million that AOL (AOL) reportedly paid in 2010 for rival site TechCrunch. One source says that the asking price is between $10 million and $15 million for a 25% or 30% stake in the company.

- They don't want VC money because of the conflict of interest afflicting other tech news sites such as Pando Daily, GigaOm, and VentureBeat. Their representatives have approached several large media companies but there could be conflicts of interest there, too.

Dow Jones officially owns the AllThingsD brand, website and content. It also manages the site's ad sales, but only Mossberg is an actual Dow Jones employee. Swisher and the rest of her AllThingsD editorial colleagues are contractors paid via an independent limited liability company.

One scenario could involve the AllThingsD team leaving to start an independent venture with a new name, while Dow Jones retains the AllthingsD brand.

Foremski's Take: Walt Mossberg and Kara Swisher should have started out on their own ten years ago. However, large salaries of at least $500K for Walt Mossberg, proved too comfortable to leave. Kara Swisher and other staffers are paid competitive salaries by an independent company.

Dow Jones provided the sales and the conference infrastructure allowing them to focus on editorial.

AllThingsD has been chomping at the bit to expand its editorial team in the wake of AOL's purchase of Techcrunch, and AOL's handling of former Techcrunch owner Michael Arrington — which has been perceived to have damaged the leading startup news site. 

However, Dow Jones hasn't been able to provide enough resources for AllThingsD to respond to the market opportunities. And Dow Jones hasn't been able to integrate AllThingsD stories or video into the Wall Street Journal. It's clearly under appreciated within Dow Jones and could do much better.

The AllThingsD founding team is between a rock and a hard place. Mr Mossberg is 66 years old and might prefer a stable income.

Since the value of AllThingsD is largely the Mossberg/Swisher brand, it might be better to create a new site as The Verge did when its editors split from AOL Engadget.

They run a risk from a gap in coverage as the new media venture staffs up editorially, and in sales, and in conference administrators. Running a sales team would require recruiting new talent or partnering with an ad network, possibly Say Media – one of the more active and visionary ad networks — also based in San Francisco.

They would have to compete with the old AllThingsD brand, which could be kept going by Dow Jones with the recruitment of high profile journalists.

AllThingsOm…

One option I'd love to see but it involves VC money, which they don't want, is  an offer from True Ventures the VC firm behind GigaOm. There's a strong cultural fit and compatibility in coverage and philosophy with the GigaOm/PaidContent publications.

It would also give the AllThingsOn team immediate access to a conference organization and a sales team. Both operations are based in San Francisco.

A GigaOm/AllThingsD merger would consolidate staff expenses and create a stronger media brand to help GigaOm breakout from its current plateau. Scale is very important in the media industry and M&A scales faster than organic growth.

An additional benefit of such a merger would be the pressure on competitor VentureBeat in news and conferences.

A white knight…

"Jessie" one of the commenters on the Fortune story made an excellent point about Bloomberg:

Bloomberg is the best buyer because 1. it has a financial arsenal which they've never put to use besides acquiring Businessweek, so they could definitely put it to use with this deal. 2. they have a TV network which could broaden the audience for the conferences 3. they aren't a big player in the media landscape unlike WaPo, NBC and Conde Nast which AllThingsD would have to cover at some point as Conde Nast/NBC continue to expand online and WaPo evolves with Bezos.

But do they want a new owner?

With a management buyout they would have immediate equity and be able to draw some cash out of the refinanced AllThingsD — which is a well deserved reward for years of hard work. 

If they had been willing to risk it all, on their own ten years ago, they wouldn't be in this situation. I'm very sure the personal brands of Mossberg and Swisher would have easily carried them through to success, as it has  today. Except they would own more of it. 

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