wednesday, 30 september of 2015

Axel Springer to Acquire Controlling Stake in Business Insider

Henry Blodget was seen as a pariah after the dot-com boom. The digital media boom has been much kinder.

On Tuesday, it was announced that Business Insider, the online publication he founded in 2007, had sold a controlling stake to the German media conglomerate Axel Springer for $343 million. Mr. Blodget declined, in an interview, to say how much money he personally made from the deal. But it was most likely more of a windfall than he could have reasonably expected 12 years ago.

In 2003, after leaving his job as a senior Internet analyst at Merrill Lynch, he agreed to pay $4 million to settle accusations that he had promoted some companies’ stock in public while disparaging them in private. As part of the agreement, he was barred from the securities industry for life.

“I don’t see today as a redemption,” Mr. Blodget, 49, said by phone Tuesday, adding that he had worked daily, with others willing to give him a chance, to rebuild trust. “But I did have a tremendous fall. I was very ashamed of the way I left Wall Street, and I certainly did not want to leave public life that way.”

He will stay on as Business Insider’s chief executive and editor in chief.

The sale of Business Insider, which features a mix of business, political and general-interest news, and occasional photo slide shows of seemingly mundane experiences, represents the highest price for a digital media company since The Huffington Post was sold to AOL for $315 million in 2011.

It follows what some have seen as the emergence of new titans in the media, and others have seen as a potential digital media bubble. Vice has recently been valued at more than $2.5 billion, BuzzFeed at $1.5 billion and Vox and The Huffington Post at about $1 billion each — all figures many times greater than their annual revenue, traditionally the measure for valuing a business.

The deal for Business Insider was the latest move by Axel Springer, one of Europe’s largest newspaper publishers, to aggressively extend its reach into digital and English-language media. Mathias Döpfner, Axel Springer’s chief executive, said in an interview that the acquisition was aimed at increasing his company’s audience and helping it become a major player in digital publishing in the United States. It follows smaller investments, and a partnership with the website Politico for European political coverage.

The valuations had given him pause, he said.

“Of course you always think about that, we all have this experience of 2000 in our memory,” he said, referring to the dot-com bubble. “But it’s interesting how people are changing their views.”

Journalism, once largely dismissed in the digital landscape, he said, has shown that it could be a vital and lucrative business online, even if it is not yet precisely clear how.

Last year, Axel Springer said its digital businesses generated more than half of the company’s annual revenue and 70 percent of its operating profit of 507 million euros, or $569 million. Business Insider adds considerable audience — about 76 million unique users a month — to Axel Springer’s 122 million, Mr. Döpfner said, making his company one of the largest digital publishers in the world.

“Reach is first,” he said, “then follows monetization, then follows profits.” Google and Facebook, he said, did not immediately make money either.

He denied speculation that Axel Springer had opted to buy Business Insider after a recent attempt to buy The Financial Times failed at the last moment; it was sold instead to the Japanese media company Nikkei for $1.3 billion.

“Really these things were separate deals,” he said. “We invested in Business Insider before we entered into serious talks with The F.T.," he said of a smaller stake the company had previously taken in the publication. Business Insider, he said, is a digital native, which comes with distinct advantages. “Having said that, had The F.T. been available at a reasonable price the combination would have been good,” he said.

Axel Springer, which also publishes Bild, Europe’s largest-circulation daily newspaper, as well as the German newspaper Die Welt, said it would acquire 88 percent of Business Insider, increasing its stake to 97 percent from 9 percent. The remaining 3 percent of Business Insider is owned by Bezos Expeditions, the personal investment vehicle of Jeffrey P. Bezos, the founder and chief executive of Amazon. (The deal is subject to approval by European and American antitrust regulators.)

Business Insider’s revenue this year is expected to approach $50 million, the majority coming from digital ad sales. Axel Springer executives said that they expected sales to increase at least 30 percent a year until 2020.

The deal will not mean an immediate transformation for Business Insider, the site’s chief operating officer, Julie Hansen, said in an interview.

“They haven’t purchased the company to consolidate, or create synergy,” she said. “It’s really all about making an investment in what they think is the growth area of the future.” The company will continue its expansion plans, she said, including a general interest site called Insider and a new German-language edition of Business Insider.

Mr. Döpfner, a former editor of Die Welt, praised Mr. Blodget as a creative, but disciplined, editorial and business leader.

“And his own history, the sad chapters of his career, mean he has this kind of extra motivation to show that he can do it," he said.

(Published by The New York Times - September 29, 2015)

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