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AOL is buying TechCrunch blog

The struggling Internet portal will pay as much as $40 million for the blog, which has gained a strong following among entrepreneurs, executives and financiers in Silicon Valley.

September 29, 2010|By Jessica Guynn, Los Angeles Times

Reporting from San Francisco — AOL Inc. is buying TechCrunch for as much as $40 million in a high-profile partnership that weds the struggling Internet giant trying to reclaim its former glory with one of the more influential blogs in the technology industry.

AOL Chief Executive Tim Armstrong joined TechCrunch founder Michael Arrington onstage Tuesday to make the announcement at the TechCrunch Disrupt conference in San Francisco.

Arrington, 40, an outspoken entrepreneur who built a hobby chronicling the rise and fall of young companies into a Silicon Valley powerhouse, said San Francisco-based TechCrunch would operate as a subsidiary and retain its distinctive editorial direction.

AOL's Armstrong, who is hiring hundreds of writers to create original news content and snapping up content companies to capture more users and advertisers, said the TechCrunch purchase would give AOL "a much larger tech presence." AOL already operates Engadget, a TechCrunch competitor, which it bought in 2005.

Buying TechCrunch represented Armstrong's most aggressive move yet to rebuild AOL around online content. Also Tuesday, AOL said it had acquired Thing Labs Inc., which makes Brizzly social software, and 5Min Media, a video content syndication company.

Since Armstrong took over as CEO in April 2009, AOL, which spun off from Time Warner Inc., has also bought two online media companies, Patch Media and Going Inc.

The TechCrunch acquisition could pay off for AOL in higher rates for advertisers trying to reach a desirable demographic. TechCrunch says it reaches 9.2 million people a month, generating 30 million page views. Many of those readers are venture capitalists, angel investors, technology executives and other high-net-worth individuals. TechCrunch also runs a conference business.

In an interview, Arrington would not comment on the terms of the deal. But a person familiar with it said the all-cash deal was worth $30 million plus incentives. AOL declined to comment.

Frequently discussed as a possible acquisition target, TechCrunch has grown to include a family of blogs that generate $10 million in annual revenue. TechCrunch has held talks over the years with Yahoo Inc. and CNet but they never turned serious, Arrington said. TechCrunch also rejected taking money from venture capitalists on four occasions, he said.

AOL tried to buy TechCrunch two years ago, but they could not agree on price. The talks resumed in May with Armstrong, a former Google Inc. executive, backstage at TechCrunch Disrupt in New York, and the negotiations intensified this month, Arrington said.

Arrington, who made his name writing about start-ups, said he felt good about selling his own and planned to stay on for at least three years.

Until 1999, Arrington worked as a high-tech corporate and securities lawyer. He later moved on to start-ups including Achex Inc., a company he co-founded that was bought in 2001.

He was researching start-ups in 2005 when he realized that there was surprisingly little information on the rise of the second Internet boom dubbed Web 2.0. That brainstorm turned into TechCrunch, which Arrington started in his Atherton, Calif., home.

TechCrunch quickly gained a strong following among entrepreneurs, executives and financiers in Silicon Valley, where Arrington was as feared as he was revered for unorthodox tactics and an outsized personality that often made him a part of the stories he reported on.

Arrington said he had no intention of changing. "I'm still going to occasionally cause a bit of a ruckus," he said.

jessica.guynn@latimes.com

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