It’s not a done deal yet, but after several months of negotiations, Hearst Corp. is close to buying digital marketing firm iCrossing, the WSJ reports, citing unidentified sources. The price is said to be around $357 million with additional payments tied to certain performance targets. A few months ago, Hearst came to iCrossing with an unsolicited bid of $250 million, which iCrossing rejected as too low. After rebuffing Hearst, iCrossing brought in Bank of America as its banker to help attract higher bids. Since then, WPP Group, Dentsu, and Aegis Media have been mentioned as possible suitors. Those companies eventually balked at the high price Scottsdale, Ariz.-based iCrossing was seeking.
The combination of a traditional magazine and newspaper publisher and an online ad company is not as incongruous as it once was. Women’s mag publisher Meredith Corp. (NYSE: MDP), for example, has ramped up efforts to diversify its operations with integrated marketing offerings by purchasing a stake last year in mobile marketing agency The Hyperfactory and other similar entities.
So far, Meredith and Hearst have avoided making moves that would put them in direct conflict with the media buying agencies they depend on to steer ad dollars their respective ways. But they also realize that direct ad sales from middlemen like agencies are on the wane. The changes in online media buying thanks to the rise of ad exchanges and search marketing have made it possible — and necessary — for publishers to expand their range.
Meredith has reportedly been looking for a search marketing specialist to invest in. If this deal goes through, Hearst will have a search specialist in iCrossing. The WSJ’s sources say that in the end, iCrossing is said to be concerned that Hearst may get cold feet and not meet its asking price. However, the recovery in ad spending — especially online ad spending — makes it less likely that Hearst will walk away.
Staci adds: The non-executive chairman of iCrossing’s board is Richard Rosenblatt, chairman and CEO of Demand Media, another company in the news now for exploring its own financial future and a possible IPO. The two companies share another board member — Gaurav Bhandari, managing director, Goldman Sachs — and investors in Goldman Sachs and Oak Investment Partners. One more tie (at least): iCrossing is a service partner of Demand Media subsidiary Pluck dating back to 2008.