According to reports coming out of SXSW in Austin, Texas, international cable television news service CNN is looking to buy the high profile technology and social media news site Mashable for around $200 million. Whilst Mashable is a very popular website and has recently moved its modus operandi to include more general business and entertainment news – $200 million looks to be a very inflated valuation.
Pete Cashmore started Mashable as a blog in 2005 to cover the emergence of social media and web services such as MySpace and Facebook – but over the years the site has grown to include more staff and general technology, business and now entertainment news, seeing around 12.5 million users per month. The Mashable Twitter account also boasts over 2.75 million followers, and its Facebook page is narrowing in on a million likes – there is no doubt of the popularity of the site. But is it really worth $200 million?
Mashable turned down an AOL buyout back of unknown value when TechCrunch and the Huffington Post were brought under their umbrella for $25 million and $300 million respectively 12-18 months ago, but all reports are saying the time may now be right for Cashmore to cash out. And at this valuation, it sounds like he could be onto a winner – but the question has got to be asked where this $200 million value is coming from?
TechCrunch was seeing only a little lower traffic levels to Mashable today back when it was bought for $25 million by AOL, and after the departure of most the staff since that takeover and subsequent very public falling out between editorial staff and AOL overlords, even that $25 million is looking steep. The Huffington Post had around 15 million users back when AOL bought it for $300 million, and it has since doubled that number – but people still winced at the valuation only 50% more than that currently describing Mashable. Yes Mashable is a quality technology news source, with good staff reporters and a great handle of the increasingly social and interlinked web – but in a time when newspapers (that written content source of the past few hundred years) are struggling so hard to remain in the black and collapsing valuations, how can one judge a purely digital news source so positively?
CNN are obviously on the hunt for companies to help them embrace the web and move towards an online first strategy, and paid an arguably inflated $25 million for personalised iPad magazine aggregator Zite nine months ago, but $200 million seems like a huge fee to gain control of a blog – a type of news source that typically doesn’t do so well under corporate governance and meddling. A website/blog, like any publication, is only as good as its writers and editorial team – and they are there for the freedom that not working for a huge multinational corporation gives them – people need to remember that.
Whatever happens with the deal, however, Cashmore has successfully built a truly global internet brand and I wish him good luck with it in the future.