Discovery Communications to sell for 18 % of its 2007 purchase price

The Wall Street Journal has reported that Discover Communications will be selling the popular website, at a loss on the sale as they are only realizing 18% of their 2007 purchase price.

Read the WSJ Report here

For Discovery Communications Inc., DISCA -0.49% the website proved to be one investment in digital media that didn’t work.

Discovery said Monday it would sell the site, which offers explanations on topics such as “How magnets work” and “How do they make hollow chocolate Easter rabbits?” for $45 million, or less than a fifth what Discovery paid to acquire the web publisher in 2007.

The site is being acquired by the Internet services company Blucora Inc., BCOR +0.31% which plans to integrate HowStuffWorks into its search advertising business InfoSpace, Blucora said in a news release. Blucora disclosed the purchase price in a securities filing, reported earlier.

Discovery, owner of cable networks including the Discovery Channel and Animal Planet, acquired the site for $250 million in 2007, as part of an effort to expose more of its television content to the web.

Much has changed since then, as Google Inc.’s YouTube emerged as major destination for instructional videos of all kinds, not to mention television content. HowStuffWorks drew 7.1 million unique visitors in the U.S. on desktop devices last month, a 15% decline from three years ago, according to data from comScore. Earlier data weren’t available.

Rival sites had similar issues. New York Times Co. two years ago sold to IAC/InterActiveCorp. IACI +0.68% for $300 million, a 27% discount to its 2005 purchase price. At “how to” sites and, owned by Demand Media, DMD -2.10% web referrals have diminished because of changes to Google’s search algorithms.

Discovery has also changed tack in its approach to digital content, focusing more on creating digital-only content rather than promoting its linear content online. A year ago, Discovery launched TestTube, an online video network focused on science content.

Under the terms of the deal with Blucora, Discovery will retain rights to video content published on the site as well as relationships with its advertising clients. The all-cash deal is expected to close in the second quarter.


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