Hearst Corp, MediaNews Buy Most Of Kaango

    November 15, 2007

About three months ago, The Hearst Corporation acquired Kaboodle.  Now, in conjunction with MediaNews Group, it’s spent $20 million on 80 percent of Kaango.

Hearst Corp, MediaNews Buy Most Of Kaango Kaboodle and Kaango are hardly identical, but their names and identities (a social shopping community and classifieds site, respectively) are comparable.  MediaNews is entirely new to the scene, though, and in a filing with the SEC, it stated, “Kaango will be held by a newly formed limited liability company, which is 50% owned by each of Hearst and the Company.”

The same filing also spoke to the future of this venture, continuing, “The remaining 20% of Kaango is owned by its founders and is subject to a call option and is expected to be purchased in the future.”

This sounds like an odd situation, yet is a fairly routine arrangement, and amounts to a bet on the part of Hearst and MediaNews that Kaango will become more valuable.  There was no hint as to when (or at what cost) the option might be exercised.

In other news related to this deal, Rafat Ali states, “MediaNews also reported its revenues: it lost $1.01 million in Q3, compared to a profit of $13.3 million in the year-ago quarter.  Revenues were $334.7 million, up from $295.3 million a year ago, thanks to acquisitions of San Jose Mercury News, Contra Costa Times, The Monterey County Herald and St. Paul Pioneer Press.  It didn’t break out its online revenues, but did say that revenues remained flat.”