CNET to buy TechCrunch — why not?

by Mathew on October 3, 2007 · 13 comments

Boy, Henry “I used to be a famous Wall Street analyst” Blodget is sure on a roll — or make that a troll. Today he’s got a post about how TechCrunch could be bought by CNET for $100-million or so. His post is actually a response to one by Doug McIntyre at 24/7 Wall Street, in which Doug hypothesizes about blog networks such as TechCrunch and Huffington Post and GigaOm and how much they might be worth to existing media entities.

Mike has a sarcastic response to Henry’s post here. And there’s no question that $100-million seems like a fairy tale price — a lot like Henry’s $2,000 Google post from yesterday. Still, the idea itself makes sense. TechCrunch or GigaOm would fit as a part of CNET or several other media entities. The ironic thing is that selling would probably be a mistake, because at the moment they are doing far better than most of the companies that would be thinking about buying them.

Update:

Is $100-million nonsensical or not? Let’s look at the numbers: TechCrunch says it has 1.5 million unique visitors a month — although a commenter below says those numbers may be high — and CNET Networks has about 10 million a month, according to comScore (Compete says about 6 million a month). But as we all know, it’s about more than just uniques, right? It’s about monetization.

CNET had revenue last year of almost $400-million, although it only made a profit of $7-million, which is pretty pathetic. No one except Mike knows what TechCrunch made last year (check below for some Valleywag scuttlebutt — I have no idea whether it is even close).

Still, CNET’s market cap is $1.2-billion. If you assume that someone could monetize Mike’s 1.5 million unique visitors better than CNET can monetize its uniques (which wouldn’t be a stretch) then you could easily come to the conclusion that TechCrunch is worth about 20 per cent of what CNET is worth — or about $250-million.

I’m not saying it is, I’m just saying $100-million doesn’t look all that crazy. Oh, and Mike? If you do a deal, Cynthia Brumfield at IPDemocracy has some advice for you.

Update 2:

Dan Farber of ZDNet (which is part of CNET) notes that the rankings at Alexa and (presumably) comScore only measure CNET.com, but CNET’s family of sites get 137 million uniques a month. That’s an order of magnitude larger than the numbers I was using. That suggests TechCrunch might be worth in the neighbourhood of $20-million. Still nothing to sneeze at.

  • http://www.louisgray.com/live/ Louis Gray

    Even if the discussions were true, I don’t know that TechCrunch would want to align themselves with a boat anchor like CNET. Putting on my “Web 2.0 bubble” glasses, I could make an argument that TechCrunch is “more valuable” than CNET, fundamental business metrics aside.

  • Mathew

    I would have a tendency to agree, Louis.

  • http://spap-oop.blogspot.com Tish Grier

    A sale *might* happen if, perhaps, Arrington, Malik, and others got tired of running their new media empires. The reasons they started those ventures was, I think, to be un-msm. And they’ve done quite well..

    Looking at folks who’ve sold new-media ventures, the ventures were sold, in part, because they weren’t making a lot of money with them (I’m thinking of Pegasus News, for one.) But, if the new media enterprise is making money, and everybody’s happy, esp. at this point, what would be the reason to sell?

    And, from reading Arrington regularly, I think he really enjoys the community he’s got over there, and interacting with them–something if sold to CNET he might have to give up. CNET’s blogs might have great content, but they’re a bit low on community involvement and interaction. Certainly nothing like TechCrunch.

  • http://www.valleywag.com Low Unique Visitors

    I heard some folks at valleywag saying that John Battelle’s people are saying that Mike’s uniques are well under 1.5 million a month and the growth is not there. That puts him way below cnet. I peg him at 20m tops.

  • http://www.livedigitally.com Jeremy Toeman

    Also, don’t forget how much Mike hates CNET… But then again, $100MM is a quick way to forget!

  • http://joeduck.wordpress.com Joe Duck

    I think this is Blodget’s clever jab back at Arrington for asking to “Muzzle” him for suggesting Google could go to 2000 per share. He’s seeing how much the blogosphere will overreact to that rather spectacular blog valuation.
    *
    That said it is very conspicuous to me how some of the failing big online players seem to have more money for aquisitions than they have innovation or common sense. Given their archives and legions of underpaid high-quality writers, newspapers are in a great position to almost dominate the online content spectrum but even large papers usually have a tiny web staff who the writers and salespeople see as second class citizens.
    *
    I wonder how much this aversion to online society plays a role in the problems papers are having and the success of the TechCrunch’s and Engadget’s as news providers? I think papers have been “writing off” onliners as ADD people who can’t read more than a paragraph without moving on to the next website. This characterization comes at their own advertising revnenue peril.

  • http://joeduck.wordpress.com Joe Duck

    Ummm – people here are seriously suggesting TechCrunch wouldn’t sell for $100,000,000? Yes, they would.

  • G

    1.5 million uniques/month website is worth 100 million dollars?…you guys have to be kidding me!. Even some myspace resource websites run by teens (ex:whateverlife.com) have more traffic than that!

  • http://www.valleywag.com Low Unique Visitors

    techcrunch is an operation that has hype working for them. techcrunch fleeced attendees for tc40 and made a few million and has site ads of about 150,000 per month plus extra paid posts here and there puts them at about 3m per year this year. last year he might have made about 700,000 from what tipsters say mike spilled while at parties. it’s a good business but not a big acquisition that unless the talent goes with the deal.

  • http://joeduck.wordpress.com Joe Duck

    you could easily come to the conclusion that TechCrunch is worth about 20 per cent of what CNET is worth — or about $250-million

    Matt if you can easily come to that conclusion *have I got a website deal for you!*

    $250,000,000 for a site that probably has total revenues of (I’m guessing here) 0.8 to 1.2 million a year?!

  • Mathew

    Well, Joe, there are some big “ifs” in there :-)

    Still, using CNET’s uniques and revenues as a model, it’s not out of the realm of possibility. Of course, CNET might well be wildly overvalued as well.

  • http://www.mappingtheweb.com Aidan Henry

    I think the bigger question would be whether Arrington would stay on board. Let’s be honest – what’s a blog without the original publisher? Nothing more than a worthless content management system. TC is only worth something if Mike stays on board – at least in my mind. And I doubt he’s willing to work for an archaic Internet firm.

    Like I say, I think any blog is worthless without the original publisher as the user base has been built around their style.

    Cheers,
    Aidan
    http://www.MappingTheWeb.com

  • Mathew

    I think you are probably right, Aidan.

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