MarketWatch Reportedly Looking For Buyer, Yahoo!, CBS Top List of Potential Suitors
November 8, 2004
MarketWatch Reportedly Looking For Buyer, Yahoo!, CBS Top List Of Potential Suitors
Although company officials have yet to confirm the rumors, it appears that MarketWatch Inc., the parent of financial information company CBS MarketWatch.com (New York), is up for sale.
The company, which is reportedly receiving bids for as much as $400 million, put itself up for sale in September, according to a report put out by the New York Times this month. MarketWatch executives declined to comment. Reasons for the sale are likely good timing and a need for a change in ownership.
“There is an unusual ownership structure right now with Pearson owning a little less than a quarter and Viacom owning a little less than a quarter,” Ken Marlin, managing partner of Marlin & Associates, a New York-based investment bank focused on media and technology, told EIR. “I suspect that the management will believe that the company would be more efficient if it were part of a larger organization.”
Also driving the decision to sell, Marlin said, is the high demand for content sites that are both advertising- and subscription-supported.
Frontrunners to acquire MarketWatch include the CBS unit of Viacom, Yahoo! and Dow Jones, Marlin said. CBS is the most likely buyer because the network relies heavily on MarketWatch’s reporters for business news. But CBS may not be able to compete with the deep pockets of Yahoo!, which would like to shore up the finance channel of its news site.
Q3 2004 vs. Q3 2003
(in $ millions)
|Q3 2004||Q3 2003|
|source: Company Reports|
“The largest area of profit for Yahoo! in terms of selling advertising is Yahoo! Finance and this could be an opportunity for Yahoo! to get strength in that area,” Marlin said. AOL would also make a great fit, but has thus far made no move to enter the bidding, he added.
The sudden interest in MarketWatch stems from the company’s ability to not only emerge from the dotcom bust, but to establish a solid financial position. The company has a strong licensing business to supplement its advertising revenue stream and recently won a major contract to begin selling content to institutional investors through a partnership with Thomson Financial.
Evidence of the company’s financial health was apparent in its third quarter financials released last month.
MarketWatch’s revenues reached $19.8 million in the third quarter, nearly double the $7 million it posted in the third quarter of 2003. The bulk of that increase was the result of its new partnership with Thomson Financial, which fueled licensing revenues to more than double from $5.1 million to $12.1 million.
MarketWatch’s success at attracting advertisers resulted in a 20.3% increase in ad revenues in the third quarter from $5.9 million to $7.1 million.
©2004 Simba Information, Stamford, CT.