Corporate M&A activity is a little like addictive behavior. Once a company sets down the road to grow by acquisition, chances are they won’t stop at just one hit. For Discovery Communications, parent of TV’s Discovery Channel, TLC and others, the M&A road leads to a convergence of TV and internet initiatives. It seems they’re on it and happy to pay the tolls along the way.
Monday, Discovery Communications announced they’d agreed to buy privately held How Stuff Works, the informative and educational website property for a price reportedly near $250m.
HowStuffWorks is very much what their name describes. Something like a more detailed, and editorially controlled Wikipedia – they provide in depth explanations for all kinds of concepts – from ideas to machinery. They also hold rights for a deep library of content and exclusively licensed digital content (for images, books and maps). Their traffic was up 25% over the past year and runs at about 11m unique visitors per month globally.
The deal fits well with Discovery’s ongoing strategy to integrate web and TV offerings. (They’ve previously partnered with Move Networks for Internet video distribution.)
This will be third time Discovery has stepped forward to acquire traffic and content. CEO David Zaslav said, “we’re way behind in new media and digital. I don’t think we win by just by building vertical.” (via WSJ). Previously, Discovery acquired petfinder.com to compliment Animal Planet. They also bought popular environmentalist blog Treehugger.com in early August to join their soon to launch Planet Green channel.
HowStuffWorks will be a natural compliment to Discovery’s existing programming, especially hits like How It’s Made and Mythbusters. Zaslav called it a “strategic bullseye” in the press release. Discovery’s video clips and content will eventually be integrated into HowStuffWorks content. Advertising efforts will also be combined across web properties.
Along with the HowStuffWorks brand, Discovery will take on several assets in the deal. They include reviews from Consumerguide.com and digitized maps from GeoNova group (which was formerly Mapquest publishing). Discovery will also take a minority equity stake in HSW International, a separate entity that holds foreign language rights for HowStuffWorks content in China and Brazil. HowStuffWork’s current shareholders, which reportedly include high profile investor Carl Icahn, will retain a majority stake in the foreign rights.
The deal is expected to close in the fourth quarter. Jeff Arnold will continue as CEO of HowStuffWorks. There are no immediate plans to move the company from its Atlanta location.