Yesterday, PostMedia (TSX:PNC.B) shook up the Canadian media landscape after it announced that it had made a deal with Quebecor Media (TSX:QBR.B) to acquire all of Sun Media’s 175 English-language newspapers and digital properties for $316-million. The assets include papers such as The Toronto Sun, The Ottawa Sun, The Winnipeg Sun, 24 Hours (Toronto and Vancouver versions) and the website Canoe.
What was curious about Postmedia CEO Paul Godfrey’s press conference is that he did not mention The Toronto Star, The Globe and Mail or the Winnipeg Free Press, which are the the only major English Canadian newspapers that Postmedia won’t own, assuming it gets CRTC approval for the deal. Instead, Godfrey invoked the names of some of the world’s tech giants.
“This acquisition makes us the largest digital news and information organization in the country with more than 12 million unique visitors per month,” he said. “We need this scale and, of course, time to compete with the giant, foreign-owned, digital-only companies like Google, Facebook, Yahoo and Twitter.”
If Godfrey truly considers those companies peers, he has a long way to go. Facebook attracted 167.35 million users in the US alone in July. Google did nearly 180-million U.S visitors. And these, of course, are truly international companies that generate only a fraction of their overall traffic stateside.
So what will the new Postmedia look like? One option some think might be available to it is to go downmarket into the rhealm of click bait sites such as UpWorthy and Buzzfeed. These sites have become increasingly popular, supplanting traditional new sources with salacious headlines, polls and lists. Not surprisingly, the old guard hates them. “BuzzFeed is to journalism what Geraldo is to Walter Cronkite. It sucks,’ wrote journalist Frederic Filloux in a recent open letter to investor Ben Horowitz.
A recent raise by Buzzfeed in which respected Silicon Valley VC Andreessen Horowitz participated offers an interesting comparison because it has just raised money at what many consider to be a premium valuation.
BuzzFeed, which was founded in 2006 by Jonah Peretti, has simultaneously grown into one of the most popular and reviled sites on the web. That, however, didn’t stop Andreessen Horowitz’s from investing $50-million dollar investment into the company that reportedly valued it at $850-million.
So did Andreessen Horowitz overpay for Buzzfeed? The firm’s investment translates into a valuation of about (US) $6.53 per unique monthly visitor, based on recent reports that Buzzfeed has more than 130-million unique visitors each month.
Postmedia’s pickup, if you separate out the legacy assets, amounts to (C) $26.33 dollars per unique visitor per month, which was (US) $23.69, at press time. One could argue that there is a value to the print newspapers that the company picked up, but just as many will counter that they are worth less than nothing.
Whatever the outcome of the Sun Media acquisition, it will be fun to watch Canadian media headlines in the coming months. I’m betting we see more stories with titles such as “10 Reasons Your Dog hates the Toronto Maple Leafs and “What kind of poutine are you?”. It will be interesting to see how many unique visitors Postmedia has then.