After buying About.com for $410 million in 2005 from Primedia Inc., the New York Times seems to have thrown up its hands after witnessing dwindling revenues and is about to sell About.com to rival Answer.com for $270 Million. There are several speculative theories doing the rounds as to why the New York Times took this drastic step.
About.com seemed to do quite well for itself in NYT hands by raking in $51 million profits during 2009, followed by $62 million in the following year. However, profits dwindled to $41 million during 2011 and it was during this period that Google’s new search engine algorithm updates Panda and Penguin were introduced. There is thus speculation that Google’s updated search engines could have played a role in reducing revenues and internet traffic to About.com.
About.com has also witnessed a sharp fall in its unique users that stood at 61 million during November 2011 down to 52 million during June 2012 as per ComScore. Another speculation on the proposed sale could be a bid by the New York Times to reduce its debts since the company has engaged in selling off other assets in the form of shares and local newspapers.
The proposed sale is confirmed since Answer.com has already inked the letter of intent to pick up About.com for $270 million. The move seems to have already paid off for all concerned parties since the New York Times registered a boost in its shares prices that had climbed to over $8.50 by closing on August 8, which was when the proposed sale had been announced.
On the other hand, Answer.com that had around 40 million unique users will be able to more than double its user base with this purchase. In any case, the CEO of Answer.com, Mr Peter Horan was the previous head of About.com and was instrumental in the sale of the dotcom to the New York Times in 2005.
Answer.com also needs to get the balance 10 author integrations of Google Top 20 Author Integrations to the 10 that About.com already has, in order to please Google algorithms again and get higher leverage in terms of author integration in future.
It now needs to be seen as to how Answer.com can restore the former glory of About.com while finding a way out of Google’s new search algorithms that seemed to have adversely affected the latter.