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IAC has agreed to buy About.com from the New York Times for $300 million in cash, according to Bloomberg.But the sale won’t fix NYT’s overall digital problems—it’s still seeing declining digital revenues, which mostly come from selling ads.
NYT bought About for $410 million in 2005, in one of those attempts to move a newspaper brand into the digital age.
Here are About’s most recent top and bottom lines, according to Bloomberg, almost all of which come from ad sales:
The website’s revenue fell 8.7 per cent to $25.4 million last quarter, and it posted an operating loss of $186.8 million …
That loss includes a non-cash writedown of $194.7 million.* Once you back that out of About’s numbers, the unit made $7.9 million operating profit before taxes and other expenses in Q2 2012.
That sounds reasonable until you look at About’s revenue trends. NYT reported:
About Group advertising revenues decreased 8.9% in the second quarter and 16.7% in the first six months of 2012 …
At that rate of decline, The Times’ operating profit on About would have been wiped out completely in about a year. It appears The Times got out just in time.
IAC boss Barry Diller will combine About with Ask.com. Hopefully, he has a plan to fix About’s revenue side.
Meanwhile, here’s the overall picture at the Times—including About and the various newspaper titles—before the sale, per the most recent 10-Q:
Digital advertising revenues decreased 4.0% and 7.2% in the second quarter and first six months of 2012, respectively.
That portends more structural changes at the paper in the near future.
*Correction: This item originally described incorrectly the nature of the Times’ losses on About.com. The writedown is a non-cash loss.
- The New York Times’ Worst Nightmare Just Came True: Digital Revenues Are In Decline
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