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Quadrangle-Backed Maxim Mag May Be Turned Over to Creditors
Alpha Media, the Quadrangle-owned media company that is holding for Maxim Magazine and Blender, may be turned over to the creditors, reports WSJ, another bad sign for the media investment fund by Steve Rattner. Last week came the news that Quadrangle was closing down its media hedge fund.
Things have been bad at Alpha, and it has been forced to violate debt covenants, the story said. The largest lender to Alpha is PE firm Cerberus Capital Management, and is central to the restructuring talks, which could fall apart. Quadrangle bought Maxim and Blender from its parent Dennis Publishing USA last year, for about $250 million. Since then, its EBITDA has taken a nosedive, from about $28 million then to about $8 million that it is expected to generate this year. Kent Brownridge, who was brought in as the CEO when Alpha got acquired, left earlier in August. The digital head Doug Warshaw, who joined in fall last year, left after a few months as well.
Earlier this year, Quadrangle attempted to acquire market researcher Greenfield Online, but Microsoft ultimately won. Last year, Quadrangle brought on former Yahoo COO Dan Rosensweig to start its Silicon Valley office, and among other things he tried to take a stake CNET before it was bought by CBS. Keeping in mind Quadrangle's troubles, how long before Rosensweig leaves? His name has been brought up in connection with the hunt for a new CEO of Yahoo, but if that doesn't happen, well....
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Gaming Roundup: Trion/SciFi; WoW's New Record; LiveGamer P2P; GameHouse Relaunches; In-Game Ads
—Trion and Sci Fi staff up forthcoming game/TV project : MMO and virtual world developer Trion World Network and The Sci Fi Channel are building out the team for their as yet unnamed videogame/TV show hybrid: Blizzard Entertainment and Carbine Studios vet Kevin Beardslee will serve as senior development director, and TV writer Peter Egan will pen the first episode. Release.
—World of Warcraft's new sales record : Activision (NSDQ: ATVI) Blizzard's money-maker continues to live up to the hype—Wrath of the Lich King, the latest installment of World of Warcraft (WoW) sold 2.8 million copies worldwide in the first 24 hours of its release. At about $40 a pop, that means Lich King could have clocked in about $112 million in sales on its first day, though that's not counting retailer discounts or the $70 Collector's Edition (that comes with extra branded merchandise). And let's not forget the residual income from the game's $15 monthly subscription fee. The publisher says Lich King broke the first day sales record for PC games (which was set almost two years ago by the first WoW expansion, The Burning Crusade). Release.
—Publishers adopt Live Gamer's upgraded virtual transaction platform : Acclaim Games, GoPets and IAC's Instant Action.com have all adopted Live Gamer Exhange, an upgraded virtual goods transaction platform from in-game commerce tech firm Live Gamer. The new platform lets players buy, sell and trade items like gold and other virtual merchandise using real-world money. Release.
More after the jump.
—RealNetworks (NSDQ: RNWK) relaunches GameHouse : RealNetworks has relaunched its casual games hub GameHouse and the available payment options: including unlimited play for $20/month and a "club" membership with discounts. The site also features a free daily game giveaway. Of course, there are a glut of casual gaming sites, so anything a single one can do to stand out is a plus. Release.
—Gauging the influence of in-game ads : Dynamic in-game ads influence 14 percent of electronics purchases in consumers aged 18-34, beating out satellite radio and outdoor billboard units. The stats from BIG Research and the National Retail foundation may help electronics advertisers decide which "experimental" channels they should stick with in the midst of budget cutbacks. Via AdAge.
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now! -->
OPA Brings On Former Republican Staffer To Boost Lobbying Efforts
The Federal Trade Commission is likely to issue its recommendations on behavioral targeting rules within the next few weeks, and while the Online Publishers Association expects the FTC to keep its policy of industry self-regulation intact, it is not taking any chances. It has created a new government affairs office in Washington, D.C., and hired Michael Drobac its first VP. Drobac has served as IAC's director of governmental affairs for the past three years. He has worked for Sen. Gordon Smith (R-OR), Sen. Kay Bailey Hutchinson (R-TX) and Sen. Norm Coleman (R-MN). For the past few months, Drobac he was a volunteer on the Obama campaign's technology committee. Release
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Gigaom Network Parting Ways With Federated; Going With IDG's Tech Ad Network
Gigaomni Media (GOM), the parent company of the popular network of tech sites including Gigaom, is parting ways with its long time ad partner Federated Media, and moving to a more enterprise-focused IDG TechNetwork, IDG's tech ad network, we have learned and confirmed from the two companies. The new deal with IDG is for all CPM-based online advertising across GOM's network of seven sites, and the company will still sell events and online sponsorships directly on its own.
While this is not a significant monetary setback for Federated, it does point to what the John Battelle-founded online-ad company is giving up as it continues to scale: Its focus has been on large-scale national advertisers and creating both general and custom programs with them, as opposed to the more 'intimate" sells required for enterprise-focused vendors that GOM attracts. FM has a big-brand focus, for most part, and beyond its early start with tech sites, it has now moved into all kinds of other verticals like parenting, food, graphic arts, small business and others.
Gigaom founder Om Malik has previously publicly disagreed with some aspects of FM's "conversational marketing" approach with some tech advertisers. And while that did lead to some tension last year, I spoke to both Chas Edwards, Publisher & Chief Revenue Officer of FM, and Paul Walborsky, CEO of GOM, and both reiterated that this parting was amicable, and of course, there are too many friendships at stake here.
For GOM, this new move comes after its biggish $4.5 million third round of funding that it announced last month. In recent months it has also acquired two blogs, jkOntheRun and TheAppleBlog, and appointed a new CEO. For IDG, this is a high-profile blog media company to bring into its fold. Its ad network was launched earlier this year, and had about 100 tech blogs as of March, and would not comment on this story. It said they will have more announcements next month about it.
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Why The Latest Online Ad Figures May Be Misleading
The overall panic that has taken hold of the financial markets made its way to online advertising yesterday with the release of the Interactive Advertising Bureau's third-quarter online ad figures: online advertising up only 2% quarter-to-quarter and 11% year-over-year. But before you scramble to lower all of your estimates once again, keep in mind that the third quarter and October are likely to have been skewed heavily by the elections. While I wouldn't suggest that online behaves completely like TV, it is a long-known fact that political advertising crowds out other advertisers and tends to put pressure on pricing.
The general news and political sites have enjoyed a run-up in traffic (with questions as to its sustainability post election) that created enormous ad inventory. Economic theory will tell you that an increase in supply (i.e. ad inventory) coupled with unchanged, or even lessened demand (i.e. advertisers) can only be cleared by lower pricing. While I'm not feeling particularly optimistic about anything right now, I would caution the market to hold back on drawing any conclusions about online ad pricing or ad trends until we get past the election season. While trends are likely still weakening, the bottom is far from falling out.
Lauren Rich Fine is ContentNext's research director
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now! -->
Top Headlines Of The Week From mocoNews and paidContent:UK
Top headlines of the week from mocoNews.net and paidContentUK:
mocoNews:
-- T-Mobile USA Relaunches T-Zones With Web Content And App Store
-- Interview: Pekka Ala-Pietila, CEO, Blyk: Mobile Advertising Is Not One Monolithic Market
-- Virgin Mobile In Danger of Being De-listed From NYSE
-- Sprint Nextel May Outsource Thousands Of Jobs
-- Motricity Saga Continues: Company Sues Former Top Executive
paidContent:UK:
-- Google To UK Advertisers: Please Keep Spending With Us!
-- MP3 'Inventor' Brandenburg Invests In DJTunes Dance Music Site
-- AOL 'Evaluating' Engadget UK Launch, Other Blogs Under Consideration
-- Guest Comment: Why Music Can't 'Just Be Free'
-- News International's Wapping HQ Misses Out On Renovation, Murdoch Blames Economy
-- Blinkx Reboots Bid For Ad Net MIVA, New All-Cash Offer
And if you haven't already, take our poll on who you think should be Yahoo's new CEO.
Save the date for our LA Year-End Review and Mixer at Beverly Hills' WGA Theater on Dec. 9
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HuffPo Raises $15 Million Third Round From Oak Investment Partners; $100 Million Valuation Ballpark
Update: We have confirmed from our sources that the investor is Oak Investment Partners, the big money investment firm. Oak has invested in other digital media related companies like Federated Media, Demand Media, MobiTV, Oberon Media and others. We're still waiting for HuffPo to respond and will have more from them when we get it. HuffPo PR has a "no comment" on the story.
The Huffington Post has raised another $15 million in funding, according to the Times UK, as it continues on a high growth trajectory, which also means a high cash burn....to be fair, the site's traffic went through the roof and sky during the election season, and it has been investing a lot in expansion.
Our understanding of the third-round funding as of last week was that it hadn't closed yet, and there was a possibility that the round may even end up near $20 million...we're trying to get more on it now. While we haven't confirmed a valuation, our understanding is that it is in the $100 million ballpark, post money. SoftBank Capital has been the lead in previous rounds, and Greycroft Partners has been the secondary investor, besides money from co-founder Ken Lerer and others in seed round. The site has raised about $30 million in total until now (I calculated the total amount wrong before, and wrote $40 million then..it will be close to $30 million with this round).
The election momentum surely helped them achieve the high end of what they were expecting, but does this create unrealistic expectations on the business side? The big question for the site is on two fronts: whether it can sustain the traffic post-election (the Obama administration transition process and drama is probably still helping it) and secondly, are the direct-advertising efforts scaling up, in a market that is brutal, especially for general-interest sites like HuffPo.
The Times UK story says that the money will in part be used to develop local news sections across the U.S. and also go toward more investigative journalism. I have my doubts on that exact focus, and I would venture to say not even HuffPo understands it. It has started a Chicago site, but local is hardest to scale, and with a small direct sales force at HuffPo, even harder. As for investigative journalism, HuffPo's real daily value is in its aggregation and the spin on it, and investigative, while admirable, will not bring in the dollars needed.
More as we find out more. By the way, Arianna Huffington is doing a Q&A with Ashton Kutcher at our year-end ContentNext mixer, and even though she will be asking the questions, we will make sure she answers some too.
Staci adds: Re the questions about valuation raised in the comments: We aren't saying what we think the company is worth. Ultimately, of course, the only real value is what someone is willing to pay for it. The estimate here is our understanding of how the company and investors value it based on the amount invested and the equity received.
For everything HuffPo, read our dedicated section.
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WSJ Targets NYT's Luxury Advertisers; NYTCo Stock Hits New Low On Ad Worries
The increasingly Murdochized WSJ has been aggressively trying to lure NYT's luxury advertisers in much the same way the financial newspaper has been trying to broaden its coverage to grab its rivals general news readership. For example, high-end retailer and long-time NYT ad client Saks Inc. has recently been promoting a new Chanel boutique and men's suit sale in WSJ, Milton Pedraza, CEO of market researcher Luxury Institute, points out to Bloomberg. WSJ is definitely taking away luxury ad dollars from the NYT, both on the print and digital sides, Pedraza told me. Although luxury marketers are shifting more of their declining overall ad spend online, the fight over the category will become more intense he expects.
-- Another body blow: The fact that WSJ is invading territory that NYT once had mostly to itself is another difficult blow for the newspaper company. It's already been a rough week for NYTCo (NYSE: NYT), which was forced to trim its dividend significantly. Also, on Friday afternoon, NYTCo's stock was down nearly 12 percent to just above $5.10, which Marketwatch noted was new low. The dividend cut was a taken as a sign that the company saw no turnaround in the increasingly challenging ad market anytime soon.
-- List of shame: NYTCo's stock is now seventh on a "list of shame" that ranks S&P 500 stocks trading at or below book value, Fitz&Jen report, citing Zachs Investment Research analyst Charles Rotblut's ranking. The dubious distinction applies to companies that Zachs rates as a "buy" —as the NYTCo is—or "strong buy." Rotblut says NYTCo's multiple is trading slightly above book value at $1.03.
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Yahoo Sells Off European Comparison Shopping Site Kelkoo To PE Firm
Yahoo (NSDQ: YHOO), which has been trying to sell off its European comparison shopping service Kelkoo for a while now, has finally found a buyer, according to a report: it has been sold to a little-known UK-based private equity firm called Jamplant, for something less than euro 100 million ($126 million). Yahoo bought the service in 2004 for a price then of about 475 million euros (now $598 million). Also, the founder and ex-CEO of Kelkoo Pierre Chappaz wrote about the deal (in French) on his blog but again, Yahoo hasn't said anything yet officially.
Robert adds: Yahoo UK confirmed the sell off to us but it's not disclosing terms. First sign of the sell-off came when Yahoo re-tooled Kelkoo's Grenoble, France, HQ in September as a Yahoo R&D centre. Chappaz refused to name the price but said it was "below 100 million euros" - that means Yahoo makes a loss of at least 375 million ($472 million) euros (not including any profits in made in that time, of course). Chappaz said: "The difference is the price of management incompetence that led Yahoo's (stock price to fall) below $9."
Never heard of Jamplant? You're not alone. Chappaz said it's a new investment unit created by the founders of that other price comparison site USwitch, which sold to E.W. Scripps (NYSE: SSP) for £210 million in 2006. It seems the operators have not given up their hope of running a bargain-hunting engine, as the consumer economy begins to impact spending. From Yahoo UK MD Glen Drury's email to staff: "Philip Smyth, chairman of Jamplant, believes that, with our backing, Kelkoo should be able to accelerate its growth much faster as a standalone company.
Kelkoo has 270 staff in Grenoble and in London. Its latest business involved powering a white-label price comparison site for ITV (LSE: ITV) and similar deals with The Independent. Chappaz: "During the past year, several funds approached me to restart Kelkoo with them. I told them no. Despite my commitment to Kelkoo, I would prefer to devote myself to Wikio. The sell-off of Kelkoo by Yahoo ... after the failed agreement with Google (NSDQ: GOOG) ... illustrates the failure of this company to grow in the world of transaction services."
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DVD Sales Down; Blu-Ray's Missing Its Mark: What's Hollywood To Do?
Now it's Hollywood's turn to feel the financial crunch, and it comes in the form of an even deeper slump in DVD sales. Stats compiled from studios themselves and independent media tracking services reflect a downward trend, NYT reports. And it has insiders like Amir Malin, a partner at media-focused investment firm Qualia Capital, on edge: "Every studio is claiming, 'We're O.K. so far,' but we've looked at the overall competitive sales data and we have some concerns."
—Sales down both for the quarter and the year : According to Nielsen VideoScan, overall DVD sales were down 9 percent from Q2, and sales of higher-priced new releases were down 22 percent. Meanwhile, Warner Bros., the largest distributor of DVDs in the U.S., says sales are down 4 percent for the year. Since global DVD sales can now account for as much of 70 percent of revenue for a new film, any industry-wide decline is cause for alarm.
—Blu-Ray is fledgling: Warner Bros. also says sales of more expensive Blu-Ray DVDs will miss projections by at least 25 percent this year. It's partly because consumers are still in a "wait and see mode"—in a recent survey, 57 percent of regular DVD buyers said they wanted to make sure that Blu-Ray was the format Hollywood was going to stick with. So while the Sony-backed technology may have beat out rival HD-DVD, some execs say success in the 2008 holiday season is critical. "We think this is a do-or-die time for Blu-ray. We must get it established as a favorite holiday item," said Ron Sanders, president of Warner Home Video.
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BBC Trust: BBC Must Drop $100 Million Local Video Plan; Would Hurt Commercial Rivals
The BBC has been blocked from beginning a £68 million ($101 million), four-year program to add video bulletins to its 65 local UK websites - a proposal that had been vigorously contested by concerned commercial publishers. After a five-month inquiry, the BBC Trust regulator said on Friday the plan would hurt the nascent online video efforts of struggling local newspaper publishers, many of which were forced to answer falling profits and the classified ads downturn with layoffs this week.
The BBC wanted to add just three daily news, three sport and three weather videos to each of its region-specific sites, while the project would also have added UGC, mobile video and up to 10 live streams per year from local events. It would have cost £23 million ($34 million) per year between 2009/10 and 2013/14, or an average £350,000 ($520,000) per site, and planned to attract 11 percent of UK households.
But the proposal was met with fierce lobbying, most notably by the UK's largest newspaper group Trinity Mirror (LSE: TNI) and the Newspaper Society industry umbrella, which argued against public funding for services they said they had already invested in. The BBC Trust agreed, saying the plan would have cost commercial media four percent of revenue and, more seriously, would haveimpacted their future ability to innovate online. Regardless of competition, the trust even said the proposal would not have built local audiences as the BBC claimed. The BBC said it will consider its options. BBC Worldwide's Hulu-like VOD JV, Kangaroo, is also currently with antitrust investigators over fears it could distort the marketplace. Full story and industry reaction on paidContent:UK.
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The Latest Iteration Of Honey Magazine
Urban lifestyle publication Honey Magazine, which has had something of a tortured history, is back again, but in a new format: Honeymag.com, slated to go live in Q109, will blend fashion, entertainment and other content (including video) with social-media features from as-yet-unlaunched sister site TheHiveSpot.com. Parent company Sahara Media Holdings, Inc. actually rolled out a version of Honeymag.com in June 2007, though it mostly served as a central hub for about 35 blogs.
Founded by Harris Publications, Honey Magazine changed hands a few times. Vanguarde Media acquired it in 1999, then ceased publication when it filed for bankruptcy in 2003 (via NYT). Sahara Media picked up the brand for $600,000 in 2005, and has since invested about $3.4 million into Honey and its proposed digital offshoots like Honey Hair and Honey UK. Honey had attracted well over 1.5 million readers before its demise—and Sahara plans to leverage the former subscriber database to help entice online advertisers. Major competitors in the space include Glam Media's Black Life division (headed by a former Sahara Media exec) and Vibe magazine offshoot Vibe Vixen.
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Vivendi CEO: No Decision Yet On Whether To Sell Stake In NBCU; GE's Immelt: 'Would Buy In Heartbeat'
Vivendi (EPA: VIV) SA has yet to decide whether it will keep its 20 percent stake in NBC Universal or exercise its annual option to sell, CEO Jean-Bernard Levy told analysts at a Morgan Stanley conference in Barcelona today. According to Bloomberg, Levy said: "Right now, considering the general expectations for the value of the assets, the dividend flow we get from NBCU is very good. ... We will have to make a decision to optimize the proceeds that we get from NBC Universal (NYSE: GE). We will probably find a better allocation of assets at the right time, in the right environment.'' This may not be the time given NBCU's decent performance in a rough environment but he left the window wide open: "We will have to make the decision in the next two to three weeks, so you will hear about it shortly.'' The deadline is in early December.
Vivendi has an annual option through 2016 to call for an IPO to sell the stake; GE has the right to pre-empt that by buying it. Immelt told Bloomberg earlier this week that GE would do just that: "They have been a terrific partner. I'm not anxious to do it because they have been a good partner, but I would do it in a heartbeat.''
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Local Online Advertiser WebVisible Buys Adapt Technologies
WebVisible, a provider of local online ad tools, has acquired search marketer Adapt Technologies. Terms were not disclosed. The Irvine, Calif.-based WebVisible has raised $17 million in venture funding over the past three years, most recently securing $12 million in a second round from Redpoint Ventures in March. WebVisible markets software to small businesses with the promise of better management of their online ad buys. The company's management tools operate across a range of platforms, including search engines, which is where Adapt Technologies comes in. Among Adapt Technologies' services, WebVisible hopes to make greater use of its cost-per-action tracking system. Release
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Industry Moves: WaPo Appoints Ravindran As New Chief Digital Officer; Leading New R&D Team
The Washington Post Company (NYSE: WPO) has created a new position of chief digital officer, and has named Vijay Ravindran; he will start in February of next year. Ravindran is currently the CTO of of Catalist, a startup political tech firm that built a national voter database. This past election cycle, Catalist worked with Obama for America presidential campaign, among others. Prior to that, Ravindran was a director at Amazon.com for the ordering services group. More details in release.
Not clear: if his responsibilities are on the tech side, similar to what a CIO does, or if this is a business position. Also, will he overlook all digital businesses at the entire company including WaPo Online and the new-ish Slate Group? More as we find out from the company.
Update 1: The company clarifies: This is a tech position, so perhaps more in the mold of a CIO(see below)…
Update 2: Turns out the company's being a bit coy about his exact mandate, and possibly for competitive reasons, based on the job description that a source sent me: "[The person] will be responsible for building and leading a small Research and Development team that is working on new Internet products for the Company. This person's aim will be to discover and develop tools (and guide investment in companies doing the same) that will enhance the Company's ability to create and distribute information across multiple platforms. S/he will manage a fund to invest in companies that will advance the digital business of the Company." So a more product and strategic role than daily business.
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Industry Moves: News Corp Re-Ups Ailes For Five Years
A senior News Corp (NYSE: NWS) exec has a new deal with the company and it's not Peter Chernin. Roger Ailes, who had two years to go on his current agreement, has a new five-year lease on life at News Corp which starts immediately. He will continue as chairman and CEO, Fox News, and chairman, Fox Television Stations. Ailes also retains his other, influential role as a senior advisor to News Corp chairman and CEO Rupert Murdoch on television and news. Ailes joined News Corp in 1996 to launch FNC, adding Fox Television Stations and Twentieth Television to his portfolio in 2005. He also is chairman and CEO of the Fox Business Network, which launched last year.
The new employment agreement has not yet been filed with the SEC. According to previous filings, Ailes' compensation for FY08 included a $4.5 million cash bonus based on FNC's performance and a minimum annual bonus of $1 million on top of an annual salary of $5 million. Including stock awards, his FY08 compensation was $19.9 million. Release.
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