eBaum's World gets a buyout with strings attached

Owen Thomas — Thu, 02 Aug 2007 15:20:42 EDT

How much would you pay for a viral-video site which some have charged with stealing clips? Depends on who you ask. eBaum's World has just sold for $15 million. Or is it $17 million? Or $67.5 million? HandHeld Entertainment, the San Francisco-based developer of the ZVUE portable media player, has agreed to shell out $15 million in cash and $2.5 million in stock for the Rochester, N.Y.-based website. The rest will come over the next three years, if eBaum's World meets traffic targets and other conditions. The conditional nature of the deal reflects the buyer's shaky finances — and also, a growing hesitancy to splash cash on websites with uncertain futures.

HandHeld is borrowing $24 million, largely to finance the eBaum's deal. That leaves it with $9 million — not enough to pay eBaum's the extra $15 million it's owed under the earnout deal. That means that eBaum's $67.5 million isn't just conditional on its traffic — it's conditional on HandHeld's ability to raise money.

No matter. The takeaway from this deal is that buyers, for a host of reasons, are paying for performance when buying interactive properties. Either they're shelling out modest amounts, as Discovery did for the TreeHugger green blog, or they're placing conditions even on the most promising acquisitions, as Disney did in holding back half of its $700 million payout for Club Penguin. That's a clear sign, that despite the blog-business hype, it's still a buyer's market.

Discovery splashes a green $10 million on TreeHugger

Owen Thomas — Wed, 01 Aug 2007 14:13:23 EDT

Blogs continue to sell — but blog valuations are staying modest. Discovery Communications, the cable-and-online media company, has bought enviro blog TreeHugger for a reported $10 million. With nearly 2 million unique visitors, that means Discovery paid a very modest $5 per "eyeball" — the unpleasant online-advertising slang for a reader. Contrast that to the bubbly hopes of GigaOm's Om Malik back in 2005, when he wrote about the "return of monetized eyeballs" for Business 2.0. (Full disclosure: I helped him crunch the numbers for that story.)

If anything, TreeHugger's sale marks a steady downward trend from the frothy days of 2004 and 2005, when the $519 million deal Dow Jones struck to acquire MarketWatch and the $25 million sale of Jason Calacanis's Weblogs Inc. to AOL sparked hopes of pricier blog buyouts to come. But they didn't materialize.

Instead, today, blogs like TreeHugger are evaluated more like conventional media properties, based on audience size, advertising, and growth rates, not eyeballs alone. And, of course, strategic fit matters. Discovery's TV viewers are naturally drawn to green blogs. Better for Discovery to own those blogs than let its cable audience drift away to them.

(Update: Valleywag is owned by Gawker Media, and Gawker's publisher, Nick Denton, is an investor in and advisor to TreeHugger.)

Gawker: valleywag, treehugger

eBaum's World gets a buyout with strings attached

Discovery splashes a green $10 million on TreeHugger