Media

Drudge Report Is Worth Over $100 Million

The Drudge Report was founded in 1995 by Matthew Drudge. It was among the largest aggregation sites in the United States, if not the largest within a short time after it was founded. The site was highly successful before the availability of broadband. It has made a successful transition to the newer online environment dominated by interactive graphics and video, although it does not use either. It remains, by several measures, one of the largest news sites in America based on traffic, and certainly among the most influential. It is a prized source of significant traffic for many other news sites.

Drudge Report’s homepage always has been set up to almost exclusively link out to other news sources. The links to these news sites are from headlines Drudge editors write. Illustrations or photos rarely support Drudge Report headlines. On any given day, there are close to 50 such links. In appearance, it continues to look like sites that operated before the introduction of broadband.

A recent report in the New York Post says that a minority interest in the business could be for sale. How much is the large content aggregation business worth? It depends on which of several traffic estimates are correct, what Drudge Report gets for its advertising, its value as one of the internet’s most visible brands and a possible drop in its traffic over the course of the past year.

Several website traffic analysis companies have figures for Drudge Report traffic. Among them, widely used SimilarWeb puts its August total visits at 63.22 million. It lists pageviews at 11.41 per visit. That puts total August pageviews at 721 million.

Website analytics firm SEMrush puts August visits at 150.1 million. It lists pageviews per visit at 7.08. That puts monthly pageviews at 1.063 billion.

Drudge Report posts its own traffic figures. Its number is 725.7 million visits for the “past 31 days” as of October 7. It is unclear whether that figure is a total of page views.

High traffic news websites like Drudge Report do not tend to get high dollar values for their advertising, as measured by the industry standard of cost per thousand page views. Drudge Report usually runs four advertisements on its homepage at a time. Drudge Report clearly has the ability to target ads based on geography and reader browsing habits, which adds some dollar value.

Industry experts believe that the cost per thousand for these ads is about $1 each, or $4 for the entire home page. The site’s ads are reportedly sold by an outside firm, Granite Cubed. These arrangements are usually set up so that the firm handling sales receives a percentage of the revenue it brings in.

Based on the midpoint of traffic estimates, which is about 850 million per month, Drudge Report revenue is approximately $3.4 million a month, or $40.8 million a year.

The huge advantage Drudge Report has over most other content sites is its low operating costs. It does not need to employ journalists who write stories. The site’s goal is to take the reader to other news and feature sites through a curation process that requires very few people. Drudge Report almost certainly does not have a full-time payroll of over 20, which drives an annual personnel expense of about $1,500,000. Other expenses are modest. The entire direct cost to run Drudge Report is about $3 million a year.

The largest “expense” Drudge Report has is the percentage of its ad revenue paid to Granite Cubed, or any company that might replace it in a similar role. Traditionally, this is between 25% and 35%. At 30%, the figure is just over $1 million a month, or $12 million a year.

Drudge Report’s operating profit per year is about $26 million, with a margin of 65%, which is nearly unheard of in online publishing. However, no other site of any size has such a financially efficient model.

Media industry investment bankers usually apply multiples about five times operating profits to set enterprise value. That puts the value of the Drudge Report at $125 million.

The value of the company could be lifted by a brand that is widely known to people who go online for news content. It would take years to create a brand with similar exposure. On the negative side, by some measures, the total size of the Drudge Report audience has dropped. The number has been put as high as 40% in a year, but the figure is hard to prove.

On balance, with a high brand value, which might be offset by a drop in audience, Drudge Report is worth well over $100 million.