Guardian News and Media, the U.K. publisher of The Guardian and The Observer, is losing so much money -- £100,000 ($162,000) per day -- that it may be forced to sell assets to raise cash, industry sources say. One property that could be in play is ContentNext, the U.S.-based web publisher of PaidContent.org, which GNM bought last year for $30 million. With its good reputation for digital media coverage, sources say, ContentNext could make for an attractive acquisition target.
One company interested in potentially scooping up ContentNext is WebMediaBrands, formerly JupiterMedia. "I would certainly be interested in discussing it," Alan Meckler, the company's CEO, tells DailyFinance.
WebMediaBrands, which bought New York–based media news and events site MediaBistro.com for $20 million in 2007, is actively looking for acquisitions, Meckler says; it just sold off Internet.com for $18 million in cash. On Wednesday, Meckler tweeted, "We are on the prowl for acquisitions. Send me ideas."
"We have $25 million in the bank and virtually no debt," Meckler says. "So we're looking for sites that media professionals read."
PaidContent.org is considered a must-read by many media industry professionals, even in an over-saturated media coverage environment. Given its reputation, it should come as no surprise that other media companies might be interested in acquiring it from Guardian, if the company were willing to sell it. Rafat Ali, the editor and publisher of ContentNext media, says it would be "news to me" if GNM decided to sell his company, but he acknowledges that media companies everywhere are looking to cut costs.
Caroline Little, CEO of Guardian America, says she's unaware of any discussions to sell ContentNext. Nevertheless, she says, "If I were running the company, I would look at where I could cut costs." A GNM spokesperson simply says the company isn't seeking to sell ContentNext at this time.
Still, Guardian Media Group, GNM's parent company, is in serious need of a cost haircut, and said earlier this year it is conducting "a strategic review of its operations." GMG lost £89.8 million ($162 million) last year, while GNM had an operating loss of £36.8 million ($66 million). Since Guardian purchased it last year, ContentNext has pruned its own costs, laying off a handful of employees and scaling back its events program, including its well-attended annual fall conference in New York City.
One Guardian insider says the integration of ContentNext into the Guardian web network has been "a disaster," and that "nobody can work out why we needed it in the first place."
Across the media landscape, companies large and small have sought to cut budgets amid the worst advertising environment in years. Major magazines and newspapers have closed, employees have been laid off, and expense accounts have been slashed. Still, it would be counterintuitive for GNM to sell ContentNext a year after buying it. And Ali's network represents a relatively small slice of GNM's revenue pie, but it carries a lot of weight as a brand in the digital media world. If GNM were to shop ContentNext or sell it, its sale would underscore the company's grave cashflow problem -- as well as the broader economic pressures buffeting the industry,
To stem the losses, GNM has launched "a wide-ranging cost-cutting campaign, seeking to cut £10m [$16 million] from its editorial operation and an equal amount from commercial departments," guardian.co.uk reported. "So far there have been 50 voluntary redundancies from editorial and a further 82 commercial jobs have been cut."
GNM recently announced it would not close London's Observer, following a public outcry against shuttering the 218-year-old Sunday newspaper. If GNM's cash situation becomes so dire that it feels the need to sell ContentNext, Meckler would certainly take their call.
With additional reporting by Jeff Bercovici
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