The arms race for low-cost content entered a new era Tuesday when Yahoo (YHOO) bought Associated Content, a 5-year-old publisher that employs thousands of freelancers to write how-to and reference stories. Terms of the deal were not disclosed, but Advertising Age reports the sale price as more than $100 million.
Associated has been on the market since late last year, when it retained media investment bank Allen & Co. to explore a sale. AOL (AOL), which owns DailyFinance, reportedly made overtures, only to have the acquisition vetoed by Time Warner (TWX), its then-parent company. (AOL has since spun off as an independent entity.) AOL's Seed division share some similarities with Associated, as both utilize a vast network of freelance writers to produce articles in niches that traditional news organizations don't tend to cover. What's more, AOL chairman Tim Armstrong was an early investor in Associated.
Yahoo's Content Push
But that tie didn't prevent Associated from ending up in the hands of rival Yahoo, which, like AOL, has lately been increasing its investments in original content. Its moves have included hiring a number of high-profile journalists for The Newsroom, a new national-news blog. By simultaneously pushing into both the low and high ends of the content space, Yahoo is pursuing a strategy similar to that of AOL, which also has been snapping up traditional media stars for sites like Politics Daily and FanHouse.
"Combining our world-class editorial team with Associated Content's makes this a game-changer," Yahoo CEO Carol Bartz said in a statement announcing the purchase.
Yahoo reported higher-than-expected income in its first-quarter earnings announcement last month, thanks in part to $78 million in cost savings and improvement in display-advertising revenues.
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