Awhile back I wrote about how my previous employer, Yardbarker, had partnered with Fox Sports in an ad sales and content promotion relationship. For that article I sent some questions to Yardbarker’s CEO about the deal, one of which asking his opinion on if the partnership with Fox could lead to a future acquisition.
I have always been really intrigued by some of the bigger sports 2.0 partnerships with larger companies as its been my belief that these partnerships could serve as corporate foreplay for a possible future acquisition…..You wonder if these companies are taking a good look at the next wave of sports media entities and are utilizing various partnerships as a first date before bringing the start-up home to Mom and Dad (CFO and CEO). Pete really didn’t embrace or dismiss that possibility.
“I guess that’s one way of looking at it. You mentioned some great start ups there — as long as we all stay focused on creating value, the rest will take care of itself.”
Well fast forward less than a year later, Yardbarker is now a part of Fox. The foreplay was rumored to be incredible.
Although financial details were not released I can tell you that the price tag ended up being ^*~ million dollars. Whoa look at that. Something is wrong with my keyboard. I’ll fix that later.
There had been rumblings for awhile that Fox and Yardbarker were looking to do something bigger together, so its great to see them come to an agreement here.
First order of business is a hearty congratulations to the team at Yardbarker. They’re good people, close friends, fished me out of the business software world, and deserved for this day to come. I never had more fun at a job and I doubt that will ever change. I have a lot of great memories working there and also share a sense of pride in their big day as out of their 800 sites, I am sure I was involved in some way with a modest slice of them.
Enough of the kind words and down to business. Below are my thoughts on what this all means.
Given Yardbarker is an ad supported business and 2009 was the worst advertising recession in my lifetime, its quite an accomplishment to have weathered the storm and to have found their way into the arms of Fox. A lot of similar companies that were founded in the same time frame are struggling or even worst, no longer operational.
Founded in 2006 with some help via financing from friends. family members, academic contacts at Berkeley, Yarbarker focused their business model and broadened their reach. A diverse mix of athlete blogs, original video, community voting systems pushing traffic similar to Digg, and advertising representation for marquee sports blogs began to attract additional capital and notoriety within the sports blogosphere.
In 2008, Yardbarker raised a hefty 6 million dollar round of funding, one that put a lot of pressure on the company to grow aggressively. In a good economy, it would have likely been the way to go but towards the end of 2008 the morbid reality of the advertising recession and venture capital markets set in.
Not even 2 years later Yardbarker finds itself in a select group of advertising based start-ups to have raised under 10 million dollars and been acquired by a major media or technology company. Along the way athlete blogs became less of a focus (Twitter’s growth and athlete’s adoption of it helped the cause). Yardbarker.com was redesigned a couple of times and the community voting system was stripped out (turned out to be a wise move).
Meanwhile Yardbarker pushed all in on monetizing independent sports blogs. The sales partnership with Fox was a big boost to their revenues and filling unsold inventory with better ad rates also helped revenue while also improving bloggers affinity for the company. Also helping Yardbarker grows its reach and revenues were sales programs that sent bloggers to cool events like the Final Four to do embedded fan reporting segments.
In the end, it probably just felt right to sell to Fox. Startup life and work is very hard and it must have been a daunting experience to rally the company in the face of an economy that wouldn’t cooperate. Fox got what Yardbarker did and wanted to extend the relationship. Having worked with Fox, Yardbarker had a level of trust in how Fox would continue to operate Yardbarker going forward.
Could Yardbarker have held out for a bigger payday? Potentially, but the right company was interested and there are only handful of companies that could provide additional value post acquisition as Fox could.
For the employees, I am told it will be business as usual. For the blogs there is some upside for better ad rates and maybe more promotion/syndication through foxsports.com although that remains to be seen.
For awhile now Fox has been syndicating and promoting Yardbarker member sites content. They understood the business and took the next step last year to start selling Yardbarker’s inventory. That was a major step as it was a vote of confidence from Fox saying “We like your product…… We can sell your product…. We can make money off of your product…. We think there is a demand for your product.”
I am not sure how many campaigns Fox worked with Yardbarker to sell, but in the end they liked having access to that inventory and additional reach. Fox not only got access to the ad inventory but also a creative sales focused company that had experience coming up with unique sponsorships that appealed to advertisers. From my experience, sales people from larger organizations really struggle on this front.
2-3 years ago, ad agencies/buyers were still wary of working with blogs. I mean do you really want to be the guy who says buy ads on Yardbarker opposed to ESPN when you know its going to raise eyebrows? But as campaigns aimed at blogs became more frequent and successful, companies like Fox were beginning to face more inquiries about “social/blog solutions”. Yahoo had them, FSV, SBN, and others did as well. Missing out on these opportunities and having familiarity with Yardbarker through previous content relationships helped form their ad buying relationnship which has now materialized into a full acquisition.
Another large part of this deal, is that Fox’s total audience size grows substantially as Yardbarker’s blogs are now part of Fox’s audience. That’s not to say that Fox owns them but that Fox exclusively sells that inventory rather than having 2 companies split that responsibility. Many ad buyers are lazy and look at the top 10 sports properties per traffic monitoring companies and make media buying decisions based on those numbers. Fox adding a significant audience will certainly help them against the likes of Yahoo and ESPN, the two runaway leaders in audience size.
Other things to consider include the fact that Yardbarker.com is very large property and one that will certainly be a strategic focus for Fox going forward. In addition, Fox’s last sports acquisition (Scout for 60 million), has really been a under performing entity for them. Buying Yardbarker gives them a new trendier asset, one that brings over a great set of content that can be further promoted or syndicated on Foxsports.com. For instance the athlete blogs and some of the bigger blogs that are a part of Yardbarker may find new opportunities within their new parent company.
For the Industry:
Things are happening. You just might not be paying attention. Comcast, The Score, Fox, AOL, NBC, and Yahoo have all made some moves to acquire technology/content over the last year and a half. I think this is actually only going to accelerate. There is a level of “burnout” that occurs for bloggers as well as startups that have experienced a bubble or a recession like we just did.
More money and more eyeballs are going to sports blogs/sports 2.0 companies and mainstream media is beginning to pay attention. Acquiring or partnering with a sports blog or entity, has never been more beneficial to a large media company. Frankly its a buyers market and media companies are increasingly pulling the trigger realizing that they can’t create what startups and independent sites have created. On many levels its a culture thing. You think a company like Fox, CBS, AOL, or ESPN would have ever created, funded, and stood by a site like Deadspin?
Despite all the controversy the site brings, it has a lot of major advertisers paying great ad rates and we’ll probably see a day where Deadspin and its Gawker Media sister sites get absorbed into a major media company. This outsourcing of cool, not only helps reinvigorate stagnant brands (sorry Fox but you’ve been pretty boring from an online perspective for awhile minus Jason Whitlock), but also brings in new revenue sources as there are companies who specifically are looking to get involved in this emerging type of content.
Yardbarker selling to Fox is a validation of the work bloggers are putting in and of the attractiveness of the ad inventory surrounding that content. Its certainly a positive development as other companies will look to figure out their own strategy before its too late (unless you are ESPN and your sole objective is to get video advertisements to auto play wherever you go on their site and on their partner sites).
With Citizen Sports and now Yardbarker off the market via Yahoo and Fox, that leaves Bleacher Report, SB Nation, as well as Bloguin on the market. Assuming Fox and Yahoo are content with their acquisitions for now on the sports side, you would think CBS, NBC, AOL, and Comcast are the likely next candidates to make a move. You’d hope ESPN would get involved as well but there seems to be a strong sense that they’re not really a fan of the space in general.
Again kudos to Yardbarker on the major accomplishment.
On another note later this week, I’ll have another piece about a blog acquisition that has done frighteningly well in its first year.