• by Gavin O'Malley  @mp_gavin, October 12, 2007

Continuing on the acquisition track, CBS has paid $10 million for a nine-month-old celebrity gossip site named Dotspotter. The acquisition, first reported by industry blogs Valleywag and PaidContent, follows a string of new media investments by CBS this year.

In May, CBS demonstrated its readiness to gamble on emerging Web properties when it acquired the six-month-old Wall Street video blog Wallstrip.com. Also that month, CBS agreed pay $280 million for music recommendation site Last.fm.

But, despite the relatively small price tag, some investors cast a wary eye on the Dotspotter deal.

"That sounds like a lot of money," said Seth Alpert, managing director at AdMedia Partners, an investment bank specializing in marketing transactions.

Dotspotter attracts a mere 280,000 monthly visitors, according to audience tracker Compete. By contrast, celebrity gossip leaders like AOL's TMZ.com and the independently owned PerezHilton.com draw 3.6 million and 1.5 million monthly visitors, respectively.

Albert added, however, that Dotspotter's tepid numbers could have actually attracted CBS to the site.

"Deals like this do often occur because the acquiring company has immediate plans to create value that the company being acquired couldn't create on its own," he said. "You're going to pay a lot more for a site that's already realized its potential."

Such is the case with Last.fm. Founded in 2002, the U.K.-based recommendation site has achieved a degree of success, as it now attracts over 15 million active users in more than 200 countries. But when CBS agreed to buy the startup in May, the network outlined plans to extend the site's recommendation and discovery tools to a range of content, including video.

Dotspotter also gives CBS some choice new media leadership, particularly its founder Andy Soohoo, a former vice president at Yahoo.

Apart from confirming the deal, CBS isn't discussing Dotspotter at the moment. More broadly, the rationale behind its recent spate of investment is chiefly to create greater scale for its advertisers, according to Patrick Keane, CBS Interactive executive vice president and chief marketing officer.

"Advertisers are looking for greater scale, and, with our native properties, we weren't always able to deliver that when I came on," Keane recently told OnlineMediaDaily. Keane joined CBS in February from Google, where he had been head of ad sales strategy.