The New York Times, under intense heat at its shareholder meeting today, will argue that its About.com unit is worth twice the $410 million in cash it paid for it in February 2005.
Hmmm. Here's what Arthur Sulzberger, Jr., Chairman of The New York Times Company, will say at its shareholder meeting in prepared remarks. The Wall Street Journal posted Sulzberger's full remarks before the meeting (subscription required). I assume the text will wind up here when the meeting starts at 9 a.m. ET.
In remarks that sound defensive, Sulzberger notes how the Times is serious about financial returns and leads into this ditty:
A good example of that process was our purchase of About.com, our information-based Web site which relies on a network of authoritative guides to cover thousands of subjects. While some have criticized this acquisition, their analysis ignores the full extent of what About has achieved:
Its revenue jumped an estimated 50% last year and its operating margin expanded to 38% in 2006, up from 27% for the months in 2005 during which it was owned by The New York Times Company. As a result, we believe About.com is now worth at least twice what we paid for it.
Moreover, About is having a powerful effect on our Company by providing NYTimes.com, Boston.com, IHT.com and our regional sites with critical, digital expertise. This includes optimizing content so that it is more visible to search engines, which leads to significant increases in traffic and thereby makes our online pages more profitable.
And as we go forward, About.com will continue to adapt as its digital competitors change. In that regard, About.com is exactly like every other business — it cannot rest on its very well-deserved laurels.
CEO Janet Robinson then goes on to tout its digital transformation and About.com's role.
Our acquisition of About.com is helping us to achieve all three of these goals. About is expanding its presence, significantly increasing its video library, engaging its audience even more deeply through greater use of user-generated content and exploring opportunities to better serve the approximately 30% of its users who come from outside the United States.
About, which is just one element of a larger Web strategy, brings new energy, new ideas, new tools and new skills to our Company.
I don't doubt that About.com is important to the New York Times, but could it really fetch more than $800 million? I'm not so sure. Who would buy it? Thoughts?