Looking back some day, this could be the moment when online publishing finally “arrived.”
This morning, German publisher Axel Springer announced it is acquiring Business Insider, the digital media startup founded by veteran investor and financial journalist Henry Blodget in 2009, for a whopping $343 million -- making it by far the biggest investment in a “pure-play” online publisher to date.
Under the terms of the deal Axel Springer, which publishes Germany’s biggest tabloid, Bild, will increase its stake in BI from 9% to 97%, valuing the company at around $390 million. That’s almost twice the $200 million valuation agreed when Axel Springer took its original 9% stake in January of this year, in a testament to the company’s stratospheric growth.
To put that number in perspective, consider that BI’s current valuation, after just six years of existence, is almost twice the market capitalization of one of the nation’s biggest newspaper publishers, Tribune Publishing, at $204 million, and four times that of McClatchy Co., publisher of the Miami Herald, among dozens of other newspapers, at $97 million.
Of course, those comparisons are just as much a reflection of the steep decline in the fortunes of the newspaper industry as they are of online media’s growth prospects, however bright.
Back in 2005, for example, before its acquisition of Knight-Ridder, McClatchy had a market cap of $3.16 billion, meaning it has shed a vertiginous 97% of its market value.
But let’s not focus on these dreary trivia while BI is taking its victory lap. And a victory it undoubtedly is, as the actual transaction sets a new record for traditional media companies investing in online publishing startups — although others were assigned a higher valuation.
Looking back over recent history, there have definitely been some big deals, but none quite as big as this. Way back in 2011, AOL acquired The Huffington Post for $315 million, and in August 2014, A&E announced it would invest $250 million in Vice Media, in a deal valuing the latter at $2.5 billion.
In April of this year, Refinery29 raised $50 million from Scripps Interactive Network and WPP to fund its international expansion, in a round of investment that valued the publisher at $290 million. And in August, NBCU invested $200 million in BuzzFeed and $200 million in Vox Media, valuing BuzzFeed at $1.5 billion and Vox at around $850 million.