Some questions, you go to the Internet for the answer to. Others – Like, say, “What do I do with my high-cost, low-traffic crowdsourcing question and answer website, now that I’ve owned it for seven years and have millions of dollars’ worth of buyer’s remorse?” – you pretty much keep to yourself, especially if you already know the answer. In not entirely unrelated news, the New York Times is looking to offload its About.com subsidiary to Answers.com for a sum that’s more than $100 million less than it originally paid for it.
According to a report on All Things D, Answers.com has signed a letter of intent to purchase About.com for $270 million, substantially lower than the $410 million that it had paid in February 2005, when it beat out bidders like Google, Yahoo! and AOL to purchase the business from its previous owners, Primedia. The sale is far from complete, with Answers.com apparently needing to reach out to partners in order to line up financing, but following the All Things D report, the Times confirmed the story with a statement that read that “it is engaged in discussions regarding the potential sale of its About Group,” adding that “No definitive agreement has been reached. The negotiations are ongoing and there can be no assurances that an agreement will be reached or that a transaction will be completed.”
About.com has constantly underperformed since the NYT purchase seven years ago, with CEO Cella Irvine stepping down as a result of the site’s underperformance last year. Revenue has continually fallen for the site, with last quarter’s results down 8.7 percent to $25.4 million and an operating loss of $186.8 million. Last month, it was revealed that the Times had taken a $194.7 million write-down on the property, a move that wiped out financial gains elsewhere in the company and led to net loss of around $88.1 million for the second quarter of the year.
The sales discussions may not be solely down to the site’s amazing ability to lose money, however; the Guardian points out that the New York Times has been quietly selling off peripheral assets for some time and seeking to refocus itself on its core business and the NYT brand; the company has already divested itself of both regional newspaper publisher Regional Media Group, and also sold its holdings in the Fenway Sports Group in the last year alone.
If there’s an upside to this experience for the New York Times, it may be this; they weren’t the only ones to take a bath on About.com. While the NYT did pay $410 million to buy the site in 2005, that was still $280 million less than what Primedia had paid when it purchased the property in the year 2000. At this rate, we can expect Answers.com to be selling About for around $200 million or so at some point in the next six years.