PlayerSearch Blog

by Ted Kasten, Founder of PlayerSearch

Transaction Multiples for Media Companies for 2008

Great analysis on TechCrunch regarding M&A figures for media companies for 2008.  Consumer online media properties carried the richest valuations.

January 8, 2009 Posted by | Acquisitions, Mental Notes | Leave a comment

Surprise, surprise…Microsoft acquires another search start-up (Powerset)

As everyone knows, Microsoft has publicly stated many times that they are going to be aggressive in their pursuit of Google (with or without Yahoo). They recently announced they are buying Powerset, a “natural language” search engine that recently released its beta product. While the beta product only searched Wikipedia, and the results weren’t any better than Google’s search of Wikipedia, the UI was innovative and they are one step ahead on natural language search which is apparently worth close to $100 million to Microsoft.

After releasing their Beta product, Powerset was at a major decision point of whether to continue to fight the search battle alone or sell to one of the larger search engines. It would have required another $50-$100 million (on top of the $20mm they already raised) to start indexing the entire web themselves and to remain independent. It was certainly a great move to join Microsoft as they have huge incentive and deep pockets to invest heavily in what Powerset started in order to compete with Google. I hope we see Powerset features in live search very soon (they claim some features will roll-out by year end).

Michael Arrington of TechCrunch interviewed the Powerset Founders here.

July 2, 2008 Posted by | Acquisitions, Innovations in Search, Semantic Search | , | Leave a comment

Google Acquisitions by Year, 2001-2007

Mashable posted a graph (with the data included in an embeded excel spreadsheet) outlining the acquisitions Google has made over the past 6 years.

May 28, 2008 Posted by | Acquisitions | | Leave a comment

CBS Aggressive with on-line acquisitions

CBS has made a handful of acquisitions from wallstrip for $5 million to CNET for $1.8 billion. Here is an interesting interview with the head of M&A strategy at CBS, Mike Marquez.

The interview is available on mashable.com here.

Much of CBS acquisition strategy focuses on on-line video, but they are looking to make a variety of acquisitions that fit with their vision to grow their on-line presence, audience and advertising revenue.

May 28, 2008 Posted by | Acquisitions | , , | Leave a comment

Two more basketball content sites acquired

Kristen Nicole of Mashable first reported these acquisitions back in late March.

CraveOnline recently purchased HoopsVibe and StreetBallTalk…both basketball focused websites that will expand CraveOnline’s male-oriented on-line properties. Fantasy Sports Ventures has also made several acquisitions to build up its on-line sports presence including a similar sized (according to compete) baseketball site called HoopsHype.com.

While the acquiring companies are different, the strategy is the same…acquire existing sports properties with large, engaged audiences to generate enough traffic to attract the large advertisers. CraveOnline won’t have to touch these on-line properties (which is probably good for all involved, especially the loyal users) to increase the CPMs 5-10x what these sites were previously earning. The starting point for large advertisers seems to be 1 million unique visitors…it appears CraveOnline has surpassed that figure and these acquisitions further increase their scale.

May 28, 2008 Posted by | Acquisitions | , , , | Leave a comment

Microsoft to make “small, targeted acquisitions”

With the recent launch of the first search engine for sports, this was a good way to start the week.  The following is a quote from today’s Wall Street Journal article discussing Microsoft’s new strategy to partner/acquire with Yahoo to compete better with Google.

In an email to employees Sunday, the executive in charge of Microsoft’s online business outlined the company’s online strategy, stating that, among other areas, Microsoft will focus on trying to “disrupt” the search market through new investments, expand its display-ad business through partnerships and make “small, targeted acquisitions.”

“The fact is that we are not where we want to be in this business yet and we’ve been in this position longer than we’d all like,” wrote Kevin Johnson, president of Microsoft’s Platforms & Services Division.

The full article is here.  Microsoft has already made several small, targeted acquisitions over the past 12-24 months of on-line properties, including vertical search engines, to build out its on-line presence.  Even the alpha version of PlayerSearch already provides better search results for sports content than Google, Yahoo Search or Microsoft Live Search currently do (they solve bigger and more complex problems worth billions, but we solve this one small problem a lot better).  We will continue to improve the sports content through key industry partnerships with existing partners with our Draft Analyzer product as well as new partners.  This comment by one of the top executives at Microsoft is a key reason why a lot of companies are innovating within the search space and why a lot of capital is being invested in these companies…there are a handful of key companies with insanely deep pockets waiting to acquire the companies that get it right.

May 19, 2008 Posted by | Acquisitions | | Leave a comment

AOL Acquires Fantasy Football Site

AOL has been aggressive with its efforts to dramatically grow its unique visiters before it spins of its advertising platform. Apparently AOL has now set its sites on growing its fantasy sports traffic with a tiny (by AOL standards) but important acquisition of Flea Flicker as reported by Michael Arrington at TechCrunch.

AOL has partnered with Fanball for their fantasy football league commissioner in the past…apparently they want to own the property now. Flea Flicker is a good acquisition for AOL…it has a great user interface and is very easy to use and understand. AOL just needs to make it scale. I imagine they bought it for an attractive price for Flea Flicker but dirt cheap for AOL’s standards (Can a company that size write checks for less than a few million?!). This was the best, and possibly only, outcome for Flea Flicker. It is near impossible to build a new league commissioner site at this point. The market is filled with great sites from household brands that offer everything for free (Yahoo, ESPN, CBS to name just the top three…Fox and NBC actually broadcast NFL games and they still can’t compete with the top three; Fanball, RTSports and MyFantasyLeague are also dominant players). Flea Flicker seems to have a very easy to use site, with some pretty cool features, which is ideal for AOL. Flea Flicker had a great product, but not a great business. Both sides win here. Smart move by Ori. 26 and already sold a business to AOL…life is good!

Update:

Here is my guess on valuation:

A per subscriber valuation probably doesn’t make sense in this case as AOL was buying the technology not the customer base. So this was a build vs. buy valuation…Flea Flicker has a great site (I am not just being nice, I think Flea Flicker does a great job of making a complex service easy to use and it adds some cool features that I wish my league management sites would include!). Unfortunately for us entrepreneurs, great features with no IP protection are easily and quickly copied in the Internet world…If AOL launches this site as their own, I would bet we see some of the unique features of Flea Flicker appearing on other league management sites very quickly. So…with no proprietary technology, AOL could have built the site with 2-3 developers over about two years…at $150,000/developer (this is an all in cost to AOL including office space, healthcare, etc.; not just the salary) that is $600,000-$900,000 over two years to do it in house. I imagine AOL would be willing to pay more than their internal cost to save time to market and management hassles/risks of finding developers with the right expertise and knowledge (which they got with the acquisition). My guess is that Ori earned close to seven figures in addition to a dream job at AOL and incredible addition to his young resume.  AOL now has the foundation of a great league commissioner tool that it controls and owns.

April 25, 2008 Posted by | Acquisitions, Uncategorized | , | 1 Comment

Microsoft makes acquistions to grow presence in key verticals

Mashable has reported that Microsoft has acquired Farecast.com (travel website that predicts the price of airline tickets so users know when to buy at the cheapest price…what a great idea!). Microsoft has made public its intention of acquiring websites in key verticals to expand its advertising networks potential. Certainly a good sign for vertically focused websites with a unique offering to users that is able to build a large enough audience to get the attention of the big media players like Microsoft/MSN.

The rumored purchase price was $115 million. With about 1 million unique visitors according to Compete.com, that places a hefty valuation of 115x monthly visitors. A similar merger in the on-line travel vertical was completed at a valuation of 100x monthly visitors. To put that in perspective, Google paid 23x monthly visitors for YouTube and News Corp paid 7.3x monthly visitors for MySpace. The key difference is that the on-line travel sites are able to monetize that traffic a lot more (CPMs for travel sites are among the industries higest). Also, keep in mind that YouTube had enormous traffic but didn’t have a proven business model…and the CPMs on MySpace are apparently in the nickel and dime range (among the lowest of any site).

April 18, 2008 Posted by | Acquisitions, Vertical Ad Networks | , | Leave a comment