AOL Acquires TechCrunch Sites to Add Technology Blogs

AOL Inc., the Internet company spun off from Time Warner Inc., agreed to buy technology-blog owner TechCrunch Inc. to add news content and advertising revenue.

TechCrunch’s blogs will become part of the AOL Technology Network “while retaining their editorial independence,” AOL said today in a statement. The company paid about $25 million, according to two people familiar with the matter who asked not to be identified because the terms weren’t made public.

AOL is using acquisitions to attract more users, along with the advertisers that want to reach them. TechCrunch, the third most popular technology blog, may help the company remain relevant as Web users spend more time on competing sites, such as Facebook Inc. and Twitter Inc. New York-based AOL scooped up two other companies today: 5min Media and Thing Labs Inc.

“They want to keep accumulating sites where there are a lot of users,” said David Joyce, a media analyst at New York- based Miller Tabak & Co. “You are going to get more page views out of a TechCrunch user than you would out of an average user of the Internet.”

In August, TechCrunch sites had 3.8 million unique visitors, according to Reston, Virginia, data tracker ComScore Inc. That puts it third behind AOL’s Engadget blog, with 7.5 million visitors, and Gizmodo, a site owned by Gawker Media, with 6.5 million. AOL, then part of Time Warner, purchased Engadget’s parent company, Weblogs Inc., in 2005.

AOL rose 63 cents, or 2.7 percent, to $24.15 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 3.7 percent this year.

5min Media, Brizzly

Earlier today, AOL acquired 5min Media, which has a library of more than 200,000 videos, covering topics such as fashion, cooking and fitness. The company also purchased Thing Labs, which makes the Brizzly line of social software. The programs let users create and share content online.

Meanwhile, AOL said today it’s closing social news aggregator Propeller.com, which has struggled to attract as many visitors as Facebook and Twitter.

TechCrunch was founded in 2005 by Michael Arrington, who started the blog from his home in Atherton, California, to share news about emerging Internet companies. The company is now based in San Francisco and has more than 40 employees, according to its website. In addition to publishing an assortment of technology blogs, TechCrunch hosts conferences, including TechCrunch Disrupt, which is going on now in San Francisco.

Time to Sell

Becoming part of AOL will help TechCrunch alleviate some of the challenges that came as a result of its rapid growth, Arrington said in an interview.

“It was time for us either to start investing a lot more money in things like technology and marketing -- which probably meant raising a venture round -- or to simply sell and partner with somebody who could do that,” he said. “AOL has a very robust, large blog network that shows they have the software side nailed. So it solves a real problem for us from the technology side.”

TechCrunch expects sales of $10 million in 2010. The company will have a profit of about $3.5 million, according to a person familiar with its finances.

Arrington said he will remain at AOL for at least three years after the acquisition. “There are incentives for me and the team to stay,” he said.

Prior to TechCrunch, Arrington worked at technology startups, including Achex Inc., a company he co-founded that was bought by First Data Corp. in 2001. Until 1999, he was a corporate and securities lawyer, whose clients included technology companies, venture funds and investment banks.

For Tim Armstrong, who became chief executive officer of AOL in April 2009 and led its spinoff from Time Warner, TechCrunch is part of a return to expansion following a period of unloading assets, Joyce said. In two separate deals announced this year, AOL sold social network Bebo and instant-messaging service ICQ to private investors.

“Now they’re in a more proactive mode,” Joyce said.

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Douglas MacMillan in San Francisco at Dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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