AOL is buy­ing TechCrunch

The Web firm will pay up to $40 mil­lion for the blog, which has a big fol­low­ing in Sil­i­con Val­ley.

Los Angeles Times - - Business - Jes­sica Guynn re­port­ing from san fran­cisco jes­

AOL Inc. is buy­ing TechCrunch for as much as $40 mil­lion in a high-pro­file part­ner­ship that weds the strug­gling In­ter­net gi­ant try­ing to re­claim its for­mer glory with one of the more in­flu­en­tial blogs in the technology in­dus­try.

AOL Chief Ex­ec­u­tive Tim Arm­strong joined TechCrunch founder Michael Ar­ring­ton on­stage Tues­day to make the an­nounce­ment at the TechCrunch Dis­rupt con­fer­ence in San Fran­cisco.

Ar­ring­ton, 40, an out­spo­ken en­tre­pre­neur who built a hobby chron­i­cling the rise and fall of young com­pa­nies into a Sil­i­con Val­ley pow­er­house, said San Fran­cis­cobased TechCrunch would op­er­ate as a sub­sidiary and re­tain its dis­tinc­tive ed­i­to­rial di­rec­tion.

AOL’s Arm­strong, who is hir­ing hun­dreds of writ­ers to cre­ate orig­i­nal news con­tent and snap­ping up con­tent com­pa­nies to cap­ture more users and ad­ver­tis­ers, said the TechCrunch pur­chase would give AOL “a much larger tech pres­ence.” AOL al­ready op­er­ates En­gad­get, a TechCrunch com­peti­tor, which it bought in 2005.

Buy­ing TechCrunch rep­re­sented Arm­strong’s most ag­gres­sive move yet to re­build AOL around on­line con­tent. Also Tues­day, AOL said it had acquired Thing Labs Inc., which makes Briz­zly so­cial soft­ware, and 5Min Me­dia, a video con­tent syn­di­ca­tion com­pany.

Since Arm­strong took over as CEO in April 2009, AOL, which spun off from Time Warner Inc., has also bought two on­line me­dia com­pa­nies, Patch Me­dia and Go­ing Inc.

The TechCrunch ac­qui­si­tion could pay off for AOL in higher rates for ad­ver­tis­ers try­ing to reach a de­sir­able de­mo­graphic. TechCrunch says it reaches 9.2 mil­lion peo­ple a month, gen­er­at­ing 30 mil­lion page views. Many of those read­ers are ven­ture cap­i­tal­ists, an­gel in­vestors, technology ex­ec­u­tives and other high-net-worth in­di­vid­u­als. TechCrunch also runs a con­fer­ence busi­ness.

In an in­ter­view, Ar­ring­ton would not com­ment on the terms of the deal. But a per­son fa­mil­iar with it said the all-cash deal was worth $30 mil­lion plus in­cen­tives. AOL de­clined to com­ment.

Fre­quently dis­cussed as a pos­si­ble ac­qui­si­tion tar­get, TechCrunch has grown to in­clude a fam­ily of blogs that gen­er­ate $10 mil­lion in an­nual rev­enue. TechCrunch has held talks over the years with Ya­hoo Inc. and CNet but they never turned se­ri­ous, Ar­ring­ton said. TechCrunch also re­jected tak­ing money from ven­ture cap­i­tal­ists on four oc­ca­sions, he said.

AOL tried to buy TechCrunch two years ago, but they could not agree on price. The talks re­sumed in May with Arm­strong, a for­mer Google Inc. ex­ec­u­tive, back­stage at TechCrunch Dis­rupt in New York, and the ne­go­ti­a­tions in­ten­si­fied this month, Ar­ring­ton said.

Ar­ring­ton, who made his name writ­ing about star­tups, said he felt good about sell­ing his own and planned to stay on for at least three years. Un­til 1999, Ar­ring­ton worked as a high-tech cor­po­rate and se­cu­ri­ties lawyer. He later moved on to star­tups in­clud­ing Achex Inc., a com­pany he co-founded that was bought in 2001.

He was re­search­ing star­tups in 2005 when he re­al­ized that there was sur­pris­ingly lit­tle in­for­ma­tion on the rise of the sec­ond In­ter­net boom dubbed Web 2.0. That brain­storm turned into TechCrunch, which Ar­ring­ton started in his Ather­ton, Calif., home.

The blog quickly gained a strong fol­low­ing among en­trepreneurs, ex­ec­u­tives and fi­nanciers in Sil­i­con Val­ley, where Ar­ring­ton was as feared as he was revered for un­ortho­dox tac­tics and an out­sized per­son­al­ity that of­ten made him a part of the sto­ries he re­ported on.

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