"People have been speculating about it for months, but the real news is that this is the deal, and it's closed," said John Battelle, founder of Federated Media Publishing, who also serves as the company's chairman and CEO. Battelle told Online Media Daily that FM chose to work with the Westport, Conn.-based VC firm (under the advisement of Savvian, a small investment bank), because of Oak's "strength, reputation and success with who they've invested in the past." As part of the investment, Oak general partner Fred Harman will join FM's board of directors.
In previous weeks, rumors surrounding both the source and amount of the funds reached a fever pitch, with outlets like CNET reporting a $30 million-maximum investment, and still others like TechCrunch (a property within FM's network) speculating that the company was to be sold outright. Meanwhile, in early January, reports circulated that FM had already turned down a $100 million buyout offer.
For a network that offers advertisers the popularity and reach of sites like Ars Technica (with nearly 20 million average monthly page views) and TechCrunch (with more than 5.5 million), in addition to the hyper-targetability of publications like Start Cooking (a site geared toward kitchen newbies), the $50 million may seem pale in comparison to the $85 million that was recently pumped into vertical network Glam Media. But it's actually quite fitting, according to Battelle, as FM is not a run-of-the-mill ad network.
"We're not an ad network in the way you think of a Tacoda or a BlueLithium," Battelle said. "We're a media company with a portfolio of brands like a Condé Nast--we just have a different operating model. The publishers who create and curate their brands own their content and their destiny. We're their partners as opposed to masters."
And while Battelle said that some of the funds would be used to bring new publications under the FM umbrella, the investment wasn't an excuse to gobble up random properties. "One of the biggest mistakes a company can make is to spend money just because you have it," Battelle said. "This investment will position us to take advantage of what's going on in the market, so we'll add more, but not more or less than we were already planning on."
When asked about the sustainability of a business model that was based largely on the work of bloggers and independent journalists (particularly in light of recent coverage of how the new culture of non-stop blogging can be a health hazard), Battelle said that FM--like its investors, was very confident.
"But it's a good question to be asking," Battelle said. "Our goal is to allow people to focus on doing what they love and not have them go crazy doing the ad-serving, tech management, the marketing and business development or billing and credit part of the business."