October 6, 2005

AOL to Buy Weblogs Inc. Network

SAN FRANCISCO -- America Online Inc. has agreed to buy Weblogs Inc., a network of Internet sites focused on niche topics ranging from food to gadgets, for around $25 million, a source familiar with the deal said on Wednesday.

AOL, a unit of Time Warner Inc., could announce the acquisition of New York-based Weblogs Inc. (http://www.weblogsinc.com ) as early as Thursday, the source said.

A spokesman for America Online declined to comment. Executives for Weblogs were unavailable to comment. The personal blog of Weblogs founder and Chief Executive Jason Calacanis said he was flying from New York to a San Francisco Web conference on Wednesday evening.

Weblogs Inc. includes roughly 80 advertising-supported sites published by a group of more than 100 bloggers.

Examples include Autoblog, BloggingBaby and Engadget, Weblog Inc.'s most trafficked site, which is aimed at "rabid gadget freaks."

Engadget ranks as the Web's third most popular blog in terms of links from other sites, according to data on traffic measurement site Technorati (http://www.technorati.com/pop/blogs/)

David Sifry, chief executive of tracking site Technorati, said Calacanis has figured out a business model that is attractive to advertisers and allows bloggers to be paid.

"He did a great job of forming a network of topics of high interest to advertisers -- from babies to gadgets to luxury goods," he said.

America Online is attracted to Weblogs by the advertising opportunities created by adding the 80 sites to AOL's existing network of Internet properties, the source said.

The company is looking to offset a decline of millions of subscribers for its dial-up Internet service by boosting online advertising revenue.

Calacanis is a dot-com impresario who, in the second half of the 1990s, acted as the unofficial mayor of Silicon Alley, a hub of Internet companies that formed in Manhattan's downtown.

Weblogs is one of the more successful attempts at weaving together a network of individual blogs in order to attract a stable of advertisers and cash in on the blogging phenomenon.

A rival network known as Gawker Media is backed by Nick Denton, another New York-based blog entrepreneur. The Gawker network focuses on a smaller number of high-brow, gossip-oriented sites, including Gawker and Wonkette.

The acquisition was first reported on media industry blog PaidContent.org.

(Reporting by Kenneth Li in New York and Eric Auchard in San Francisco)