Six years ago there were rumours that Newscorp was lining up to acquire Nick Denton’s Gawker Media.
Ultimately, these never went anywhere and were never confirmed.
That was 2005. The Internet was a different place. For one, Murdoch was riding high on the acquisition of a then hot myspace … as well as purchases of AskMen, IGN, Rotten Tomatoes and other digital and mobile companies that at the time had strong momentum.
Gawker was a small content play that was considered incredibly edgy. It was, for want of a better term, a “blog network”. “Edge” and “Blogs” didn’t really fit with Newscorp.
Since then a lot has changed.
But I believe six years ago Newscorp buying Gawker made sense, and I believe now it makes even more sense.
Why? Well – here’s a few reasons I feel are pretty compelling.
1/ Gawker is operationally lean. Nick Denton has established an editorial payment model that rewards performance with employees and as a result Gawker shows no sign of the ‘old media’ bloat that causes established media companies headaches when trying to run cash positive digital businesses. It has minimal marketing costs and sophisticated sales and trade relationships.
2/ Gawker breaks the same sort of stories Murdoch is renowned for. In 2010 Gawker broke some big stories, really big. Brett Favre. iPhone 4 leaks. Steve Jobs ‘freedom from porn’ remarks. Christine O’Donnell’s one night stand. These weren’t just ‘blogs’ … they were stories that were leading US news and talk for weeks. Gawker is skilled when it comes to breaking stories that continue to build and become topical. News is equally skilled at doing this through newspapers. There are some nice similarities here. And both aren’t afraid to pay for scoops.
3/ Gawker has strong technology and showbiz brands that could extend onto pay TV as well as print. Gawker’s Gizmodo and Lifehacker are strong in Technology, and Defamer and Gawker are strong showbiz and entertainment brands. There are opportunities for content sharing from digital to print (ie – running Gawker/Defamer content on Sydney Confidential. Deadspin in the Sports section of the Tele/Herald Sun), as well as through Murdoch’s existing web assets, as well as expanding the Gawker brands onto Pay TV.
4/ International expansion possibilities. Gizmodo, Kotaku, Defamer and Lifehacker have been localised here in Australia. There’s no reason why the other brands (Deadspin, Jezebel, Jaloponik) couldn’t be extended into key markets (AU, UK, Asia) where Murdoch has a strong existing footprint. Localisation costs would be relatively low and existing sales teams make revenue generation at low head costs.
5/ It’s a bold move. Murdoch is known for bold moves and is due for one after a lot of bluster around paid content and tablets which hasn’t yielded any results of note as yet. Nick Denton and Murdoch have another thing in common – both enjoy the role as the ‘outsider’ and both have different ideas to most on where digital is heading. Some of Denton’s ideas around changing the nature of display advertising are truly compelling and ideas like that coupled with News’s global network could be incredibly powerful.
6/ Both are excellent at creating content. This is key. News and Gawker have technology elements but both are built on great content. Images. Words. Video. There is a bright future for professional content on the Internet, it’s just the notion needs a cheer squad as many believe the answer to everything now exists within technology and data.
I’ll admit I am a fan of both Murdoch and Denton, but regardless think an acquisition makes sense. Buy Gawker at around $100m, allow Denton to have control over the tone and extend the brands. $100m may seem like a lot, but it’s not a lot to a business that makes around $1b of profit per quarter and still reports its current digital efforts under ‘other’ in reporting documents.