AOL values distribution over creation

Sep 28, 2010

Dan Primack was a senior editor at Fortune from 2010 to 2016. He was also the author of Term Sheet, Fortune's daily newsletter about deals and dealmakers.

Tweet of the day comes from @pkafka, who just wrote:

If WSJ $30M TechCrunch # is correct, than AOL values company that doesn't own content 2x more than one that makes it.

Kafka, a media writer with All Things D, is referring to the fact that AOL today announced two acquisitions: TechCrunch (ubiquitous tech blog) and 5Min (syndication middleman for online video).

Pricing details for TechCrunch have not yet been disclosed, but estimates have ranged from $25 million to $40 million. Unclear if those estimates include earn-outs, which almost certainly are part of the deal. Expect a definitive figure when AOL next files with the SEC.<!-- more -->

AOL also didn't disclose pricing for New York-based 5Min, but a source close to the company pegs the price-tag at $65 million in cash. Decent return for the 5Min's VC backers, who plugged in $13.9 million over three rounds (including $400k seed deal).

But back to Kafka's point: TechCrunch makes things. Not just market-moving tech news, but also conferences that are among the industry's best. 5Min, on the other hand, collects third-party videos and distributes them to content-hungry websites.

So to my bosses at Fortune: Rather than producing original content, I'd like to interest you in some stuff that other people wrote. Can I have a raise?

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions