Peter Kafka

Recent Posts by Peter Kafka

Left at the Altar by AOL, Associated Content Hires Allen

Interested in buying Associated Content, which specializes in generating lots of low-cost, search-friendly content? The company isn’t technically for sale, and there’s no pitch book.

But if you’ve got an offer, you can go ahead and contact Allen & Company, the media banker hired by Associated Content late last year.

Associated Content looks and acts a lot like Demand Media, the Santa Monica-based “content mill” that’s drawn a lot of attention in the last year or so–though both companies bristle when you compare the two. It’s also thematically related to AOL CEO Tim Armstrong’s push to automate the production of content at that company.

That’s why Armstrong worked very hard to buy Associated Content last summer, as Silicon Alley Insider reported. I’m told a deal in the $90 million range was all but done, but ultimately nixed by Time Warner (TWX) CEO Jeff Bewkes, who wanted Armstrong to buy stuff on his own dime after AOL (AOL) spun out from the media giant.

AOL is free and clear now, but it doesn’t have a bankroll for big acquisitions. Earlier this year, the company spent $36.5 million on video platform StudioNow, but AOL execs have said they can’t and won’t spend any more than that on acquisitions for some time.

So if Associated Content, which is backed by Canaan Partners*, Softbank and Armstrong himself, wants an exit in the near term, it will have to look elsewhere.

Like where? Prior to bringing on Allen, the company flirted with Yahoo (YHOO), which has yet to do much M&A in the Carol Bartz era, but will one day. And sources says CEO Patrick Keane has even chatted to Demand Media, his company’s chief rival, about the possibility of a combination.

Another possible route: Conventional media outlets, some of which are already using the start-up to help fill their Web pages with cheap content.

Alternately, the company can stay solo and hope its story becomes more attractive as time goes on. People close to Associated Content say it’s on a $15 million run rate, up from $4 million earlier in the year. ComScore pegs the company’s audience at 10 million unique visitors (though as usual in these cases, the company says it has many more, and Quantcast puts the number at 20 million).

Associated Content declined to comment.

*An earlier version of this article incorrectly described Polaris as an investor in Associated Content.


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