There are a couple of different ways to look at the acquisition of Quartz, which announced early Monday morning that parent company Atlantic Media is selling the site to a Japanese financial information provider called Uzabase. On the one hand, for a media startup to get between $75 million and $110 million after only six years in business is cause for some celebration, given an industry environment in which even giants like BuzzFeed are missing revenue targets, and one-time superstars like Mashable are selling themselves for a fraction of their previous value (The Atlantic magazine was sold last year for an undisclosed price to Emerson Collective, which is controlled by billionaire Laurene Powell Jobs).
On the other hand, the Quartz deal doesn’t give media insiders much to celebrate from a financial point of view. Based on figures from a Uzabase slide presentation about the acquisition, even the higher end of the proposed sale price (based on certain subscription targets being met over the next five years) amounts to about 2.5 times Quartz’s projected revenues for this year, and less than four times2017 revenue. That’s not quite at the low end of prior deals, but neither is it at the high end, which was set by Axel Springer’s acquisition of Business Insider in 2015, for six times projected revenues.
As for how Quartz compares to other digital media exits, it is an OK exit, barely above Univision buying Gawker multiples. Like I said before, about 2 to 2.5X next 12 month revenues. BI sales to Axel still the most inflated sale of all, or from BI’s perspective, best exit of all! pic.twitter.com/r9umoO59ig
— Rafat Ali رفعت (@rafat) July 2, 2018
To be fair, the Business Insider deal is widely seen as an anomaly. The German media giant had reportedly gotten board approval to spend as much as $1 billion on an acquisition of the Financial Times, but when the magazine was bought by Japan’s Nikkei instead, Springer was left with a bag of cash and a hunger to expand. The muted price for Quartz could also be a result of what appears to be a revenue decline last year of about 10 percent (to $27 million), as well as a loss of $8 million.
Another reason the Quartz deal is likely to spark only muted celebration in broader media circles is that Atlantic Media has had discussions with potential buyers off and on since 2015, and it wound up being sold to a little-known Japanese media startup not much older than itself. Uzabase was founded in 2008 by two former investment bankers from UBS. Their original mission was to build a financial information service that could compete with Bloomberg, a service now known as Speeda, and more recently Uzabase launched a news curation/aggregation app called NewsPicks.
Although the name may not be that familiar to a lot of North American users, the company says NewsPicks has more than 64,000 users who pay $15 a month for a premium version of the app, which allows members to share and comment on news articles. That’s an income stream of almost $1 million a month, something many media companies would no doubt like to have coming in as digital advertising wanes. And Uzabase itself appears to have a strong business: The company went public in 2016 and the stock price has climbed sharply since then, giving it a market cap of almost $1 billion.
Much like the Nikkei deal for the Financial Times, the Quartz acquisition by Uzabbase suggests there is a continuing appetite from Asian media entities—particularly financially-oriented ones—for outlets that have a presence in English-speaking markets. But based on the terms of the Quartz sale, no one in the media industry should get their hopes up about that translating into a massive windfall.
Correction: An earlier version of this post referred to Atlantic Media as “shopping Quartz around.” The company said that while it had expressions of interest from a number of potential acquirers, it never officially put the site up for sale.Mathew Ingram is CJR’s chief digital writer. Previously, he was a senior writer with Fortune magazine. He has written about the intersection between media and technology since the earliest days of the commercial internet. His writing has been published in the Washington Post and the Financial Times as well as by Reuters and Bloomberg.