Katie May sells KidSpot group to News Corp for $45 million

News Corp has purchased web entrepreneur Katie May’s online parenting portal Kidspot for a reported $45 million, in a move that represents a rapid rise for the six-year-old business and highlights how much media companies now value established websites with strong communities.

News Corp announced yesterday it would purchase KidSpot and all of its related entities, including Birth.com.au, Kidspot.co.nz, The Spot, SheSpot, Research Studies, Mums Say and Baby and Kids Market, which hold offline parent community markets.

The websites have a dedicated following, and provide expert information and a wealthy advertising portfolio within SheSpot, which also represents Best Recipes, Easy Weddings, Weight Watchers and Mamamia.

The move comes after Fairfax acquired the website FindABabySitter.com.au for $3 million back in December 2009, in order to expand its Essential Baby online services which have nearly 20,000 paying subscribers.

Neither News Corp nor Katie May would confirm whether the $45 million purchase price, reported by the Australian Financial Review, was correct. The KidSpot group is currently turning over about $7 million a year, with annual growth at nearly 70%, and counts more than 1.3 million unique visitors a month.

May, who previously helped found Seek.com.au, says while she was not prepared to sell the company a few years ago, she believes the company’s juxtaposition wiht competitors has changed.

“From a business perspective, it was very easy to exist in those days. We were a specialist company, but continued to live our lives and enjoyed our success under the radar,” she says.

“But over the last 12 to 18 months, we grew and built partnerships with some of the better brands in Australia and we’ve caught the attention of competitors. It’s a much tougher race now – far more aggressive against us – and from a board perspective we thought having muscle behind us would be a good thing.”

May also says there was a personal element to the sale, with the death of former chairman and former Melbourne Lord Mayor Irvin Rockman allowing shares to be passed on to his estate. “That can motivate a slightly different path for the business,” she says.

Reports indicate the Rockman family owned 40% of KidSpot, while May is said to own about one third.

May says the acquisition contains no earn-out deals. She will stay on with the business for at least another 12 months as chief executive. “I’m excited about this phase of the business,” she says, adding it will allow the company to try new projects with corporate backing.

May says she has noticed a more bullish type of environment in digital advertising.

“Things have become more interesting. Brands are putting money into online, whereas it was traditionally used in television, and I think that’s been good in connecting brands with customers.

“However, I think we’ve evolved faster and we’ve continued to win in this space.”

News Limited chief John Hartigan said in a statement Kidspot was attractive partly due to its 31,000 fans on Facebook, representing one of the largest, “most active” fan bases of any Australian media group.

“This deal makes us the leading player in the highly valuable online parenting market and, by combining Kidspot with the most dominant food vertical, Taste.com.au, and the most aspirational fashion vertical, Vogue.com.au, we now have an unrivalled presence in the online market for Australian women,” Hartigan says.

“By delivering exactly what advertisers want – an engaged, loyal and targeted audience – the Kidspot team have built a profitable, rapidly growing, digital business.”

Hartigan also noted that the Kidspot group accounts for 10% of total online fast-moving consumer goods advertising.

The deal is a testament to significant growth in the online community space, with media giants News and Fairfax eager to appeal to the large number of mothers who have more time to research parenting information online.

The move also comes as media groups have been eager to snap up group buying communities, representing their interest in purchasing well-established groups – many cited the fact these sites had large Facebook followings as one reason for investment.