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Primedia swallows About.com

But why did Wall Street get shirty?

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Primedia's buyout announcement of online directory service About.com wiped around a third off its stock price yesterday - but why did Wall Street get shirty?

The value of the $690 million stock deal fell to $500 million by the end of the day, thanks to Primedia's share price tumbling to $11.44. The agreement, expected to be finalised by early 2001, involved 2.34 Primedia shares for every About one.

Silicon Alley's About claims to reach 60 million people per month - reportedly giving it the seventh biggest audience on the Web. Its directory service has 700 specific guide sites - ranging from pregnancy and astrology to satellite communications and woodworking. It also has real-life "guides", who choose and recommend sites in specialised, niche areas.

Primedia also owns many niche titles - it has 250 magazines, including New York magazine and American Baby, along with more than 200 information products and trade shows and 296 Web sites. It has 1,600 sales staff, compared to About's 100.

So what was unpopular about the deal? Yahoo offers a directory service, and is the most popular site in the cyber-universe - although it also has a much-used search engine.

Basically, it looks like Primedia is spending hundreds of thousands of dollars to get on the Net, but now that it has - Wall Street is asking, so what?

"Maybe it's because these combinations of old media and new media haven't done too well," said Troy Bryant, IDC associate analyst for Internet portal branding. Bryant cited Infoseek and Disney as an example - saying Disney seemed to be having a hard time integrating the move.

"People are waiting to see if this combination [old media and new media] will work."

But Bryant said the deal would be good for About - who he sees as a specialised version of portals such as AOL or MSN - giving it access to Primedia's sales force and to more traditional advertisers.

And Primedia? "It doesn't hurt them - they get a site that's not a Yahoo yet, but has the potential to grow."

Yahoo is successful largely because it was first - and it used this advantage to build its name by advertising offline as well as online, he said. But About has a more specialised audience, and this deal will get their name into the market.

"About.com seems to combine everything they've [Primedia] ever wanted in one site," said Bryant. "And all they had to do was buy it." ®

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