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Summary:

This is MSNBC.com’s first ever acquisition: MSNBC.com is pushing into the social news arena with the acquisition of Seattle-based Newsvine.T…

imageThis is MSNBC.com’s first ever acquisition: MSNBC.com is pushing into the social news arena with the acquisition of Seattle-based Newsvine.The site, which combines professional and user-generated content, is one of a number of social news services, often mentioned alongside Digg and Reddit (acquired by Wired a year ago). According to a post on Newsvine’s blog, the company will operate independently, while MSNBC.com explores ways to integrate Newsvine’s technology across the broader site; this is very similar to Wired’s approach with Reddit. Launched in 2006, Newsvine was started by ex-Disney (NYSE: DIS) and ESPN employees and has raised a total of $1.5 million from Second Avenue Partners. Terms of the acquisition were not disclosed.

Newsvine founder Mike Davidson on his blog: “So why would an independent, cost-efficient, growing startup like Newsvine which has taken very little venture capital want to join a huge organization like msnbc.com? The answer comes down to global impact…We never set out to prove that grassroots media was better than mainstream media or vice-versa. The theory, in fact, has been quite the opposite: that given the right environment, an ecosystem where big and little media make each other stronger can be developed. This has been proven out on the Newsvine site itself since we launched about a year and a half ago.”

Rex Sorgatz, Executive Producer of MSNBC.com, had this to add on his blog: “By positing news as an ecosystem rather than a hierarchy, the philosophy of Newsvine is actually an old one. News has always been conversational, but only recently have we begun to rediscover the tools to bring it back to its networked mode.”

MSNBC.com’s own story: That buzz, and the technology behind it, are what msnbc.com is buying. While msnbc.com has long ranked among the three most popular news sites on the Web, it has been late to the game in expanding its offerings in user participation and non-professional reporting.

Rafat adds: My guess on the price, based on some background, is in the $5 million-$7 million range. MSNBC.com is still half-owned by Microsoft (NSDQ: MSFT) and NBC, while MSNBC the TV channel is now fully owned by NBCU. Just spoke to Davidson, who mentioned that the process started in May, when they started getting inquiries from other media companies. Multiple companies were in the bidding process, and the deal closed Friday. It is an all cash deal.

Both MSNBC.com and Newsvine are Seattle-based, and MSNBC.com’s offices are 20 minutes from Newsvine, which is housed in the SeattlePI building, so the closeness helps, he said. The company and site will remain separate, but elements of Newsvine will be integrated in MSNBC.com soon. MSNBC.com’s stories will now be integrated within Newsvine, which had syndication deals with AP and ESPN till now.

For MSNBC.com, this hopefully kickstarts the news site, which has always been among the biggest online (and pioneer in integrating multimedia elements in news stories) but has been slow to innovate and capitalize on its lead, as social media/news sites and features spread across the Web. Expect some more acquisitions…

By Joseph Weisenthal

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  1. Sorry Rafat, but a correction: MSNBC.com (the website) is still a joint venture; however, MSNBC (the cable outlet) is fully-owned by NBC.

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  2. ok – but what was the price? :)

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  3. Rex
    Thanks on it…i was correcting it while you were posting this comment :)
    Frank: We're trying to get the price…will post it here when we do.

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  4. I can't imagine that Newsvine was sold for only $5-7M. If they raised $1.5, the company's post-money valuation would have been in the $5-7M range to start with, which means investors would have received not return on this sale. Also, with close to a million users, a $5-7M valuation would have valued their users at just $5 to $7 each. Compare this to a site like StumbleUpon, which went out at a valuation of close to $75 per user.

    Newsvine was growing well, had managed its initial $1.5M investment very nicely, and could have easily raised a second round of capital, so why would they sell at a valuation that would have reaped little to nothing for their investors? My guess is that they went for at least $40M.

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  5. Uhhh, yeah, what Thomas said.

    Do you know what a liquidation preference is? It means the investors get probably the first 4.5 to 6 million right off the top. Do you also know Nick Hanauer, the lead investor in Newsvine just made 300 million off Aquantive and is worth about a half bil? At 5-7 mil, he could buy the thing with his pocket change according to you!

    Nice guess though! :)

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