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You’re reading it here first … The Sports Illustrated Group will announce Thursday that it has an agreement to acquire sports social net FanNation.com and its underlying technology. At the same time, Time Inc. will acquire a minority interest in the site’s parent company, Sports Technologies, Inc.; more specifically, in a subsidiary of STI. When the Sports Business Journal first wrote of a possible deal late last year, the deal was reported to be $25 million for 40 percent of the site. We said then it sounded high for a percent of a start-up site and the actual deal is quite different — as is the amount, which is at least $20 million for both FanNation and the STI investment but far less than $30 million and nowhere near the valuation of $60 million being floated in December for the site alone. This makes a lot more sense financially.
As fate would have it, a Time Inc. colleague’s illness put Jeff Price, president of SI Digital, at my side for today’s interview session at SIIA. He hinted at upcoming news during the on-stage interview; later, he confirmed to me that this deal had been struck but said he couldn’t discuss the details.
Some people have asked me why SI would even consider serious money for a site with maybe 100,000 monthly uniques. The simple answer: “It’s the technology, stupid.” My understanding of this is that SI gets the Web 2.0 technology FanNation is built on and will license it back to STI for development; STI will work on development for SI and other Time Inc. sites but also will continue to work for third-parties. As I suggested last month, the FanNation technology will be deployed across Time Inc.’s sites eventually but not sure which one will come after SI. (My 2 cents: the social network tools could come in handy as part of the re-think at RealSimple.com.)
The FanNation site will stand on its own but will become part of the SI network along with SI.com, Golf.com and SIKids.com.
The site and parent company were founded by former ESPN employees; investors include former NHL COO Steve Solomon, former Starwave chairman and CEO Mike Slade, and Jesse Itzler of SFX and Marquis Jet.