America Online has agreed to purchase Weblogs Inc., a web log-based Web magazine company owned by Jason Calacanis, The Blog Herald and various other news sites report. The news is generating quite a bit of talk throughout the blogosphere, as well.
AOL will attain 85 web logs, or blogs, from Weblogs Inc. upon completion of the deal, generously adding to AOL’s content. Popular blogs such as Endgadget, Autoblog, Luxist and TV Squad are included in the deal, which was made Wednesday and will close sometime next week. The news of the acquisition comes during a time when AOL is losing subscribers in record numbers to low-cost dial-up and broadband Internet Service Providers.
AOL will pay $25 million in cash to close the deal. This is AOL’s third acquisition this year. The company purchased Wildseed Inc. and Xdrive Inc. earlier this year.
Weblogs Inc. hosts more than 100 independent bloggers who produce more than 1,000 posts weekly, allowing AOL the opportunity to widely expand on content offerings. It plans on embedding blog links into Moviefone and Netscape, as well as into pertinent channels. For example, game blog links would be embedded into the Game Channel and auto blog links would be embedded into the Auto Channel.
The Pew Internet and American Life Project reported earlier this year that 9 percent of Internet users have created blogs and 25 percent have read them. Current Weblogs Inc. owner Jason Calacanis said that Weblogs Inc. earns in excess of $1 million in advertising dollars through a Google-based program. He said it also earns revenue through other advertising means, which he would not comment on.
“What every advertiser says to us is, `Please get us more traffic. We want to spend more money,’” Calacanis told AP. “That was one of the major factors,” in the decision to find a buyer, he said.
Shares of Time-Warner, AOL’s parent company, fell 5 cents to $17.95 on the New York Stock Exchange when news of the deal broke.
Rumors floated after this story broke that Rupert Murdoch’s News Corp. has been in talks with Nick Denton about purchasing Gawker Media, another company that has capitalized on the ever-growing web log media movement. Reports claim that News Corp. is especially interested in Gawker’s gossip blogs.