Bronte Media

One rule of the downturn for troubled companies is that whatever is salable will get sold. This rule runs contrary to logic as any rational human being would rather keep what’s working and get rid of what is not but they don’t call it a downturn for nothing.

Following up from my gloomy Newspaper post, Gawker reports on the New York Times shopping About.com.

The NY Times acquired About.com from Primedia for $410m in March of 2005. While many criticized the price, the acquisition has proven to be a fantastic one for the company. About.com will likely do over $100m in revenue this year and the economics of the business are glorious (margins of 50%+). So it’s not hard to see even in this down market how they could at least get their money back ($400m) and they have been exposed to the profits for the last three years.

Why is About.com a good business? Because it’s a ’second page’ company. What do I mean by second page? Although the content is fairly ordinary (so much so it is my girlfriend’s most hated site), it ranks superbly in Google and it wholly focuses on answering questions consumers have on their minds.

You could say About.com earns it’s revenue from ‘display advertising’ next to ‘news articles’ but it is more like a search business. The user is in a laser sharp mode of seeking an answer to their question and that means they are willing to transact for whatever product or service is involved and they are liberally more willing to click on advertising.

From an advertising point of view, this is multitudes more valuable than a reclusive billionaire reading the latest diarrhea diatribe from Paul Krugman. Such is the state of online advertising in 2008: you’d rather have a mid-western housewife looking to cook an egg than a gold-standard environment of demographics, journalism and flash banners.

It would be incredibly foolish of the New York Times to sell About.com. They should be wading deeper into the area and indeed, blurring the lines between the Times itself and the About.com model. Kind of like eHow and HowCast. But the reality is the most likely scenario is that they will sell. They are on their financial knees, wading in debt and must act to right the ship.

Until Newspapers are willing to completely transform themselves we will continue to see a death by a thousand strategic mistakes, which although are the ‘next logical move given the situation’ compound themselves into a future of oblivion.