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How Much Are Mashable.com, DrudgeReport.com, & Gawker.com Worth?

Douglas McIntyre from WallSt247.com published a great post this morning, The Twenty Five Most Valuable Blogs, about trends the valuation of leading blogs.  What is great about this piece is that it applies traditional technology company valuation techniques to web properties most of us visit on a regular basis.  As Douglas noted in his post:

“It is extremely difficult to put accurate financial values on blogs. Almost all of them are private companies.  Some do raise VC money and those sums can be used as guidelines if and when they are disclosed. Like many content businesses, the only worthwhile value is what an acquirer will pay.  At least two blogs from last year’s 24/7 Wall St. list were sold-Ars Technica and PaidContent., both very near the valuations we gave them.”

24/7 Wall St. used traditional metrics for analyzing and valuing blog properties:

“To determine value, 24/7 Wall St. looked at unique visitor and pageviews information from several public sources including Alexa, Quantcast, Compete, and comScore. These services are often criticized for estimating website traffic too low and we have taken that into account to the extent possible. We also looked at audience measurements provided by the blogs themselves when it seemed credible. Our estimated CPMs for ads are based on the current display and text ad environment, the quality of ads at each blog, and the number of ads that it runs on the average pages. The CPM value assigned to each blog is based on all of the ads it runs on its typical pages. To determine margins, 24/7 looked at headcount when available, and estimated costs of operating and maintaining websites. More complex content platforms where assigned higher monthly costs. Current audience growth rates were taken into account.  A site which has traffic doubling year-over-year was given a higher multiple than one which is losing traffic.  Because not all blogs make money, multiples of revenue and operating income were used to assess value.

Large blogs with big “moats” got higher multiple that smaller ones. Recreating Huffington Post or TechCrunch would be extremely difficult, especially in a recession. Blogs with one founder who does most of the writing were given lower multiple because the presence of that single person is essential to the company’s value. Finally, blogs which have been operating for a long time or have recently received funding received higher valuations because they are more likely to survive.”

24/7 Wall St.’s analysis estimates that the top blog generates over $36 million in revenue, $18 million in operating income, and would be worth $170 million with an 8x operating income multiple.  The smallest of the 25 blogs was estimated to have $200,000 in revenue and was worth $1 million.  Surprisingly only five of the blogs were generating greater than $7.5 million/year in revenue.   Take a look at the following summary table generated from 24/7 Wall St.’s report:

top-251

 Sixteen of the blogs were generating less than $2.5 million in total revenues a year.  You should read the original post to get all of the gory details.  A few excerpts, however, might be interesting.  The infamous Drudge Report is estimated to generate $15 million in revenue and is worth approximately $42 million.  Social Media darling Mashable.com is estimated to do $1.2 million in revenue and be worth.  Daily Kos, the political news junkie site is estimated to only do $1 million in revenue and be worth $2 million.

Here’s a list of the top 25, sorted by estimated valuation:

1.  Gawker Properties

2.  Huffington Post

3.  The Drudge Report

4.  Perez Hilton

5.   Sugar, Inc.

6.  TechCrunch

7.  MacRumors

8. SeekingAlpha

9.  GigaOm

10. Politico

11. SmashingMagazine

12.  SearchEngineLand

13.  Boing Boing

14.  ReadWriteWeb

15. SB Nation

16.  Destructoid

17.  Mashable

18.  Alley Insider sites (Silicon Alley Insider, Clusterstock, Greensheet, and The Biz)

19.  /film (slashfilm)

20.  The Superficial Network

21.  Neatorama

22. Daily Kos

23.  Talking Points Memo

24.  VentureBeat

25.   Wowowow.com

The only issue with 24/7 Wall St.’s analysis is that the revenue/operating profit multiples they use to estimate blog valuation.  20 of their estimates work out to be greater than 3x trailing twelve months revenues.  In today’s depressed technology M&A market valuations greater than 1.75x trailing twelve months revenues are considered extremely rare.  3x, 4x, and 5x valuations are as common as tech company IPOs.

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2 Responses to “How Much Are Mashable.com, DrudgeReport.com, & Gawker.com Worth?”

  1. what are the "other sources" determining alexa traffic? Says:

    The factors that are determinant in a website’s http://www.alexa.com/data/details/main?url=www.fortunehotels.in Alexa rankings apart from the data collected from the users of the Alexa toolbar are no where clearly mentioned. This somehow brings in a question of doubt and credibility issues as far as the Alexa rankings are concerned. However, even today the Alexa toolbar has the largest chunk in determining the ranking of a website.

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