Would Reuters (RTRSY) Or Yahoo! (YHOO) Buy SeekingAlpha?

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SeekingAlpha, the big financial commentary and blog site, syndicates its content at a number of other large web properties with Yahoo! (YHOO) Finance and Reuters.com (RTRSY) probably being the largest. There has been recent speculation about the value of technology and news websites like Huffington Post and TechCrunch. The main criticisms of these valuations is that they are too high based on the traffic and revenue that the sites are likely to be creating. Would a large financial "blog" face the same issues?

The value analysis that simply looks at revenue does not address the issue of larger media companies picking up assets that they believe are strategic. Earlier today, CBS (CBS) bought Dotspotter for a rumored $10 million. The site is a fairly small celebrity property.

SeekingAlpha would have a significant value if it were owned by a large financial media company. It produces over a hundred pieces a day, a mix between its own commentary and blogs from other websites. A number of large financial sites like WSJ.com, NYTimes.com, and MarketWatch.com already run blogs from their own writers. It appears to be considered a hot business.

Based on data from Compete, Alexa, and Quantcast, 24/7 Wall St. estimates that SA has 2,750,000 page views a month. Financial sites tend to get high CPMs due to their demographics, so we have assigned a $10 CPM to the advertisers on the site.

SA runs an average of four display ads on each page, which would bring in about $110,000 a month. The site also has six discount brokers in its "Trading Center". At a $2 CPM, these would bring in another $33,000. Classified and Adsense may be worth another $5,000, bringing monthly revenue to almost $150,000. This does not include any money they bring in from the use of their e-mail lists.

Having a hundred or more stories a day has a special value to sites like Reuters and Yahoo! Finance, especially if they have to pay for most of their current content. Reuters has high editorial costs due to its large number of full-time reporters. The SeekingAlpha stories could drive a high number of page views on a very large financial site.

On a simple 10x revenue model, SA would be worth a little less than $18 million. But, because of the value of the content, and its relative size compared to other financial commentary sites, SA is probably worth twice that amount, of $36 million. TheStreet.com (TSCM) currently has a market cap of $400 million. AOL owns another large financial blogging site called BloggingStocks which is uses to supply content and links to AOL Finance. It probably considers the strategic value of that site to be fairly big.

About a year ago, VC firm Benchmark Capital put money into SeekingAlpha. At some point they will want a return. SA already has relationships with Reuters and Yahoo!.

Deal?

Douglas A. McIntyre

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