Is the Huffington Post really a $200 million company? Monday's New York Times story about the fast-growing group blog/news aggregator left a lot of people wondering about that eye-catching number, reportedly the price the company uses in its internal discussions about the possibility of a sale.
The consensus, among those who know about some matters: No, the Huffington Post is not remotely worth $200 million.
"It's absurd," says media banker Reed Phillips of DeSilva & Phillips. "It's not based in reality in terms of any metrics we see in the market."
"It's a ridiculous expectation based on their own perception of the brand," says another M&A banker who preferred to be anonymous. "There was a time when people would buy into ridiculous numbers like that, sight unseen, but that time has passed."
What would be a more reasonable valuation? Try $40 million. That's four times Huffpo's own high-end estimate for $2008 revenue -- a typical multiple for recent transactions involving content businesses.
Alternatively, one can also analyze the price in terms of traffic, but it doesn't make that much difference. Two hundred million dollars "seems to be way above market based on comparable transactions," agrees Henry Donahue, CEO of Discover Media and former CFO of Primedia's Lifestyles Magazine Group. Donohue recently wrote about blog valuations for Folio. Via email, he continues:
If you believe the Post, Discovery (a relatively aggressive media co.) paid $10 million for Treehugger, a blog with an obvious fit for their Planet Green business. According to Alexa, Huffington is 4-5x the traffic of Treehugger, but that doesn't get you to $200 million. The $10-20 per unique metric (which I still think is nuts) would put them at $40-80 million.
A major factor limiting Huffpo's worth is its focus on partisan politics. "Advertisers hate political content," notes one online publishing exec. That may be why Huffpo is extending its brand into the seemingly apolitical areas of sports and books. After a lot more of that type of expansion, maybe, someday, Huffpo will be a $200 million business.
Overcompensating the Drudge Report Way
Does falling behind Arianna Huffington in the unique-visitors race have Matt Drudge feeling a little insecure?
"THANKS FOR MAKING MARCH '08 THE BIGGEST MONTH IN THE DRUDGEREPORT'S 13 YEAR HISTORY!" screams a banner that went up on the disturbingly influential news blog this afternoon. "MANY THANKS FOR YOUR CONTINUED SUPPORT... THE LOVERS AND THE HATERS... AND NEWS ENTHUSIASTS IN OVER 100 COUNTRIES!"
The "biggest month" claim is based on a total of more than 590 million "page loads," a somewhat controversial measure, since an automatic screen refresh boosts the total.
Last week, Drudge posted this story from the Newspaper Association of America's Digital Edge blog claiming Drudge Report is tops among 30 "current events and global news destinations," ranked in order of "sessions per person."
If you're wondering exactly what "sessions per person" measures, you're not alone. When I asked Beth Lawton, who posted the story on the NAA blog, why she'd chosen to rank the sites that way instead of using a more widely-recognized metric, she said that was just how Nielson Online had served up the data. "The things that we tend to pay attention to are the monthly unique audience and total page views," she added, quite sensibly.