In a move that will beef up content for Time Warner's (NYSE:TWX) America Online, AOL is acquiring Weblogs, Inc. The purchase price has not been disclosed, though when PaidContent.org broke the story, it put a $25 million price tag on the deal.
Weblogs, Inc. is not a blogging site in the same sense as popular personal-publishing sites like LiveJournal, Blogdrive, or Google's (NASDAQ:GOOG) Blogger.com. It's simply a network of 85 high-quality blogs, where 100 different independent bloggers produce about 1,000 new pieces of content every week.
So this isn't exactly an open-door policy, where wannabe bloggers can post about their petty daily happenings. Weblogs, Inc. recruits only popular and knowledgeable online personalities. It's the blogging equivalent of About.com, where community guides are recruited to flesh out the reference material.
It's just what the doctor ordered for AOL, which has been struggling with subscriber defections over the past three years. AOL already has a vanilla blogging service -- AOL Journals -- but it just hasn't been able to gain the same kind of traction as other edgier self-publishing platforms out in cyberspace.
The network of Weblogs, Inc. sites generates 30 million monthly page views, as well as another 25 million page views as the content is duplicated on third-party sites through automated syndication. With online advertising providing the strongest growth spurt for Time Warner in recent quarters, growing Internet traffic is a key component to improving the financial picture. With the cross-promotional opportunities that will arise as AOL drives even more traffic to the Weblogs network, which in turn trickles out to the repositioned AOL.com site, this is a great deal. AOL isn't just paying $0.07 per page view for the inherent traffic over the next year with the rumored $25 million price tag. It's also buying itself some street cred in the Internet space that it sorely wants to be a bigger part of.
The move may also signal that AOL is planning to go it alone, rather than team up with a potential acquirer like Yahoo! (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT), or Google to monetize its growing dot-com real estate.
Shares of Time Warner have beaten the market since being recommended in the August 2002 issue of Motley Fool Stock Advisor, but only by a thin margin. This kind of proactive effort to matter in the online space, where growth is faster and multiples fatter, may be just what the stock needs to inch its way toward higher ground.
Longtime Fool contributor Rick Munarriz is proud to be one of those 20.8 million AOL subscribers. He does not own shares in any of the companies in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
