DHD website sold for $14M: Send finder’s fee check c/o The Digitalists
Posted by Daniel Granof on June 25, 2009
A bellwether for a digital economy turnaround? Nikki Finke’s Deadline Hollywood Daily, which we featured only days ago, was sold for an estimated $14M to Mail.com this week, according to industry website TheWrap. Coincidence? I think not. A mere mention on our venerable blog obviously would gild the site’s value by a factor of at least ten, so don’t we deserve some sugar? No? Okay, then we’ll settle for a good timing certificate.
So is this a legitimate benchmark for new media or an anomaly? Seems like the latter. Sharon Waxman from TheWrap had a great commentary on this issue three months ago:
[F]rom a business standpoint, her site is not scaleable (there’s only one of her).
Then there’s the problem of advertising appeal. “How do you monetize her 200,000 readers – through studio advertising? It’s not going to happen. Through high end consumer advertising? Very difficult,” said one interested buyer who kicked DHD’s tires and walked away. “Nikki could sell to somebody, but it’s not an easy sale. And it hasn’t been.”
Another trait making this deal an outlier, Waxman also points out, is the unique tornado that is Finke herself:
Beyond cash, any company purchasing DHD must measure the emotional cost of getting into business with Nikki Finke. She is a handful by any measure, and will not be controlled by any boss. (You might ask LA Weekly’s editor Laurie Ochoa about that.) Many wonder that her aggressive invective has never led to a lawsuit. And I can state with certainty that the flacks of Hollywood live in terror of her calls.
(For a fuller understanding of Finke’s prickliness, be sure to read Waxman’s interview with her.)
I’m pretty skeptical about the accuracy of the $14M purchase price. The site has less than 200,000 uniques per month – Waxman herself cites analysts who say that $2 per unique is a good going rate for valuing a content site, meaning DHD is worth less than half a million dollars. To get to $14M the deal must have some kind of huge, long-term earnout, or else include a healthy portion of equity in Mail.com with a high paper value. By comparison, Greg’s company, Mediabistro, was sold for $20M to Jupiter Media, and it had much more to its business model than content. Mail.com’s assets are a fantastic url and a couple other entertainment news sites; one has to wonder what grand synergistic ambitions they have in mind for DHD that would justify paying so much. According to Finke the only thing planned is adding another reporter on the East Coast.
Nonetheless, it is a good sign for all of us that in the worst ad market in decades – and probably the first real one for new media – a deal that values premium content can go down.
Greg said
What I found most amazing about the deal was realizing that Mail.com was still in business.