I can has acquisition?
Cheezburger, the pioneering online comedy network that brought cat pictures and outrageous videos to millions around the world, has been sold to an undisclosed, newly-formed private media company, GeekWire has learned.
The Cheezburger brand and network of sites will continue, and the company’s 14 employees will remain in Seattle as they continue to chronicle wackiness from around the Web on sites such as This is Photobomb, My Little Brony and, of course, I Can Has Cheezburger.
In an interview with GeekWire, Cheezburger CEO Scott Moore declined to name the buyer or the purchase price, though he did confirm that the terms of the acquisition were signed on Sunday. A GeekWire source said that the newly-formed media company that agreed to buy Cheezburger is based overseas.
“Really, the strategy is to build a millennial media powerhouse,” said Moore. “And put together several brands that are complementary and leverage both the economies of scale that we get on the cost side and the economies of scale that we get on the sell side with advertisers, and also use a variety of different sites that are strong on their own to cross promote one another.”
He added: “Scale is everything in media.”
Cheezburger now attracts about 13 million unique visitors per month, with about half of that traffic coming from the U.S. That’s down significantly from a few years ago. The Cheezburger sites will make up the majority of the traffic of the new media company, which will now boast about 20 million monthly unique visitors.
One of the reasons why the company did not want to be identified is that it continues to gobble up other online media properties, and it did not want those deals to be hampered because of publicity.
Moore will continue to run Cheezburger, though his exact title within the new company has not yet been determined.
“We have just been heads down on getting this deal done,” said Moore, who first started shopping the Cheezburger network to potential buyers last summer. At least one other offer was made, but Moore said that acquiring company just made more sense.
The acquisition marks the latest chapter for the Seattle company, which was formed by Ben Huh in 2007 after he purchased the I Can Has Cheezburger? Web site. Huh, with the help of his wife Emily, went on to create a network of comedy sites including Fail Blog, Know Your Meme, The Daily What and dozens of other sites. At its peak in 2010, the sites attracted more than 375 million views per month as the company refined its mission of “giving the world 5 minutes of happiness a day.”
But the happiness faded at Cheezburger in recent years.
The company, which raised $30 million in venture funding in 2011 from Madrona and Foundry Group, struggled to make the shift to a mobile world.
Traffic to the Web sites sunk, and competition for viewers ratcheted up as dozens of mobile-friendly media sites produced attention-grabbing content in the online humor arena. Competitors included sites such as TheChive and CollegeHumor.com.
“Mobile continues to grow, but the revenue we generate from it is significantly less,” Huh told GeekWire in 2013 following a 35 percent layoff at the company. “We want to take this year and think about how we can generate similar returns in mobile, or else you are going to have the case of one part of your platform subsidizing the other.”
Huh added at the time: “I want to build a long-term business. I am not here to pump up the numbers, and sell it next year.”
A year later Huh wrote an in-depth blog post about the problems the once-scrappy startup encountered after taking on the $30 million venture round, with the CEO blaming himself for the missteps and noting that the company had turned into a “confused, money-losing mess.”
Moore set on a course of repositioning Cheezburger and halting its traffic slump, something he said started occur late last year as traffic started to increase again for the first time in many years. He also dramatically reduced costs, lopping off about 70 percent of the costs of the company in the past two years. In 2013, the company employed about 65 people.
Moore declined to go into specifics of the acquisition and whether it marked a positive financial deal for investors, saying only that the major investors on the board felt like it was “a good outcome.”
More recently, Cheezburger encountered troubles as users installed ad-blocking software, cutting off a significant revenue stream for the company.
“We know many of you don’t like ads with your Cheezburger,” the company wrote in a blog post from last September encouraging users to turn off their ad blockers. “But those ads pay for our servers and the salaries of our staff. (And cat food!) We’ve put a ton of effort into making Cheezburger and KnowYourMeme faster to load. We do our best to eliminate bad ads, like those that start audio automatically. But the stark truth is that advertising is our life blood…. If our ads are blocked, we can’t afford to put out the product.”
In fact, one of the big reasons why Cheezburger sold was due to a changing online advertising climate. Even at 13 million monthly visitors, the Cheezburger network was not big enough to attract large brand advertisers.
“We needed to get bigger,” said Moore, adding the the acquiring company “liked the idea of scaling up” to create a much larger media entity.