The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

If Current TV Was Worth $500 Million, How Is BuzzFeed Worth $200 Million?

Posted on | January 4, 2013 | 30 Comments

There has been a lot of noise in the wake of the sale of Current TV to Qatar-based Al Jazeera, and Ed Driscoll linked damn near all of it today, so there’s no point me re-hashing it here. What intrigues me is the valuation of the product. Was it worth $500 million to essentially buy a slot from major American cable TV providers?

According to the news reports, Al Jazeera does not intend to keep much, if any, of Current TV’s programming. That means it is willing to pay $500 million simply to be carried by the large cable providers. That implies that these providers have extraordinary market power. This should be raising lots of questions at the Federal Communications Commission.

Well, screw that regulatory nonsense, I’m talking raw market value. If a dismally unsuccessful news outfit is worth $500 million just to get their slot on cable TV, how does that extrapolate in terms of assessing the value of other media entities? When the Huffington Post was sold to AOL in February 2011, I thought the reported $315 million sale price was absurdly high for an outfit that, whatever its ranking or market share, had never made a profit. But now comes this startling estimate:

BuzzFeed, the six-year-old website that blends coverage of corgis and Congress in irresistible listicles, took another round of financing yesterday, and the Wall Street Journal’s Tom Gara now pegs the company’s valuation at around $200 million. I hear the same number from a source close to BuzzFeed’s investors.
That’s a heady valuation, though it’s only five times BuzzFeed’s expected revenue of $40 million in 2013, according to Gara. . . .
BuzzFeed has now raised about $46 million from investors, which puts it atop a list of media startups, backed by venture capital, that have emerged since the founding of the Huffington Post in 2005.

Forty-six million dollars of investment capital? For a Web site? An estimated value of $200 million? Excuse my extreme incredulity, but if they are so gosh-darn successful — “expected” revenue and all that — why did they need to raise another $19 million from investors, eh?

Does the phrase “dot-com bubble” ring a bell?

How about “pump and dump”?

Look, I kinda understood when a desperate sinkhole like AOL was willing to fork over $315 million for HuffPo. Even if it didn’t make a lick of sense as an investment, this is AOL we’re talking about — a company that hasn’t really made sense in a long, long time, and whose executives were therefore willing to pay a premium for buzz and market share, without any genuine likelihood of turning a profit. So . . .

What sucker does BuzzFeed have in mind? Where is the obsolete and desperate-to-seem-relevant circa-1994 online enterprise that will pay $200 million dollars for a site that has already (evidently) burned through its first $27 million of capital? Maybe . . . Yahoo?

If a bunch of rich Arabs can buy an entire cable TV network for $500 million — even a useless turd like Current TV — does it really make sense for anyone to pay $200 million for a mere Web site?

Color me skeptical. But hey . . .

Make me an offer, rich Arabs.


UPDATE: Linked by Ed Driscoll with a bit of wordplay on a line from A Clockwork Orange, a movie I’ve only watched all the way through once, when I was in college. I never was much of a Kubrick fan — a bit too ostentatiously artistic and cerebral for my taste in movies — but Alex does have some memorable dialogue.



30 Responses to “If Current TV Was Worth $500 Million, How Is BuzzFeed Worth $200 Million?”

  1. Michael Swartz
    January 4th, 2013 @ 11:18 pm

    I think we’d all just settle for regular tip jar rattling.

  2. Charles G Hill
    January 4th, 2013 @ 11:21 pm

    There’s one thing Al-Jazeera and Buzzfeed have in common: neither of them asked Tina Brown for a makeover.

  3. Tjexcite
    January 4th, 2013 @ 11:35 pm

    Same thing with Facebook. All they are is a data storage system with servers and webcode. Yet they and their name is valued in the billions. Which is more than Disney with all the parks, cartoons catalog and the whole empire.

  4. Ed Driscoll » Can You Spare Some Qatar, Me Brothers?
    January 4th, 2013 @ 11:38 pm

    […] Spare Some Qatar, Me Brothers? January 4th, 2013 – 8:38 pm Tweet “If Current TV Was Worth $500 Million, How Is BuzzFeed Worth $200 Million?,” Stacy McCain asks: Look, I kinda understood when a desperate sinkhole like AOL was willing to fork […]

  5. dkmkc2000
    January 4th, 2013 @ 11:38 pm

    RT @smitty_one_each: TOM If Current TV Was Worth $500 Million, How Is BuzzFeed Worth $200 Million? #TCOT

  6. robertstacymccain
    January 4th, 2013 @ 11:45 pm

    Charles, we’ve obviously been working the wrong end of this New Media racket. What we need to do is start marketing ourselves as innovative visionary entrepreneurs, throwing around catch-phrases — optimization! networking! interactivity! — and hustle up $40 million in venture capital with promises to re-invent the digital wheel. Then we outsource this grimy content-provider work to Indonesia.
    Hell, we can train Indonesians to do celebrity bikini slide shows, right? Maybe we’ll have to pay a few American college kids $9 or $10 an hour to do headlines and captions, but everything else will be done for pennies on the dollar in our digital sweatshops in Jakarta.
    But who cares? It’s just content. What counts is the SEO and stuff like that. Also, venture capital — lots and lots of venture capital. And then we throw a couple of lavish parties for our friends at the Wall Street Journal, New York Times, etc., and they’ll write up a lot of breathless feature stories about how we’ve captured the online zeitgeist and have “expected revenues” of some ginormous number that we just pull out of thin air.
    Bing, bang, boom — we sell out to a multinational conglomerate, pocket a fat wad of cash, and walk away real casual-like, so they don’t get the idea that maybe they just got scammed.

  7. John Scotus
    January 4th, 2013 @ 11:55 pm

    I wish I could convince someone that my blog was worth $200 million–or even $2 million. I’d sell it in a second.

  8. Evi L. Bloggerlady
    January 4th, 2013 @ 11:59 pm

    I can be had cheap! All this Qataris can be yours!

  9. Bob Belvedere
    January 5th, 2013 @ 12:21 am

    Base the operation in Vanuatu!

  10. Evi L. Bloggerlady
    January 5th, 2013 @ 12:25 am
  11. Adjoran
    January 5th, 2013 @ 12:38 am

    So far, the $500 million figure has been mentioned in reports, but there is no evidence A-J was dumb enough to pay that much for access to cable and satellite channels – Time-Warner already announced they won’t carry them. More like Gore hype to make his failed Current TV seem like a success.

    But the FCC has no statutory authority in the matter regarding cable systems, their reign is over broadcast TV only.

  12. John Scotus
    January 5th, 2013 @ 1:01 am

    Why settle?

  13. They Say Conservatives Have All The Money And Clout? | The Lonely Conservative
    January 5th, 2013 @ 1:07 am

    […] claim that conservatives are the ones with all the money and clout. When is the last time you heard something like this about a conservative website or network? If a dismally unsuccessful news outfit is worth $500 […]

  14. This Blog For Sale | The Tree of Mamre
    January 5th, 2013 @ 2:19 am

    […] McCain notes that Current TV was sold to Al Jazeera for $500 million, and that Buzzfeed has been valued at $200 millio…. Now, if a cable TV channel that almost no one watches is worth $500 million and a webpage that […]

  15. Adjoran
    January 5th, 2013 @ 2:21 am

    Buzzfeed’s value in relation to Current should be stronger, I would think. Although web impressions are worth less to advertisers than television for a number of reasons, Buzzfeed gets many multiples of the eyeballs Current ever has.

    Current has a base of 50-70,000 viewers, if I remember the ratings data correctly. Even CNN laughs at them.

    But the purchase is NOT based on the viewership, A-J is revamping the entire schedule, nothing is to be retained. The only cable systems that will retain it – even at Current’s basement price – are those serving substantial Arabic muslim populations.

    They could have started their own network and got as much exposure as they will end up with anyway, at a fraction of the price. I smell a rat.

  16. Quartermaster
    January 5th, 2013 @ 9:19 am

    Stacy, you’ll never be bought by A-J. You’re simply too sane. Particularly compared to the Goracle.

  17. jsn2
    January 5th, 2013 @ 10:07 am

    Maybe it just means that libs are stupid investors or they have a pipeline to suckers with lots of money.

  18. richard mcenroe
    January 5th, 2013 @ 11:48 am

    Server farm, satellite uplink…

  19. richard mcenroe
    January 5th, 2013 @ 11:49 am

    I’ve been sitting on a strong offer from Andorra for a while now. Maybe I should take it up…

  20. Becca Lower
    January 5th, 2013 @ 12:14 pm

    Location, location, location!

  21. SDN
    January 5th, 2013 @ 12:51 pm

    Occam’s Razor: We know that other oilbags like the Saudis have been pumping cash into various “green” groups to hamstring US domestic oil production. The Qataris just found a slightly different way to launder the payoff to the biggest “green” Wienie of all.

  22. KingShamus-(D)
    January 5th, 2013 @ 3:12 pm

    I’m already in very deep talks with rich Qataris about purchasing my blog.

    They’re imaginary talks, but still, visualizing success or something.

  23. Wombat_socho
    January 5th, 2013 @ 4:40 pm

    There used to be a widget that would calculate the notional value of one’s blog, but I haven’t seen it around in a while.

  24. Wombat_socho
    January 5th, 2013 @ 4:41 pm

    Well, they do serve up a lot of ads to those that use it without ad-blocking software.

  25. Bob Belvedere
    January 5th, 2013 @ 5:00 pm

    I used it every once in a while – too depressing.

  26. Bob Belvedere
    January 5th, 2013 @ 5:02 pm

    Al-Jizz just wants the coveted cable channel slot. It’s like buying a failed restaurant just to get the liquor license and to avoid having to apply for a new one.

  27. Bob Belvedere
    January 5th, 2013 @ 5:03 pm

    Just don’t sell ’em your kingdom, Majesty.

  28. Rand Paul Running for President and Weekend Links!
    January 5th, 2013 @ 5:24 pm

    […] Other McCain has up a great blog post asking “If Current TV Was Worth $500 Million, How Is BuzzFeed Worth $200 […]

  29. » This whole New Media thing
    January 5th, 2013 @ 8:49 pm

    […] we’re doing it wrong. Robert Stacy McCain asked how it could be possible for a Web site (BuzzFeed) to be valued at $200 million, and how an actual TV channel (Current TV) […]

  30. A Nurse With Attitude – This Blog is for Sale!
    January 10th, 2013 @ 10:10 pm

    […] Stacy McCain notes that  his network was sold to Al Jazeera for a little over $500 million, and that “Buzzfeed”…. Now, if a cable TV channel that almost no one watches is worth $500 million and a webpage that […]