Sources Say AOL Seeking Buyers for Engadget and TechCrunch, Arrington "Not In The Least Bit Interested"

By Sarah Lacy , written on May 8, 2012

From The News Desk

We weren't sure about this one at first, but now we have two independent sources confirming that AOL is exploring the sale of its cornerstone technology sites Engadget and TechCrunch.

The two would likely be sold together as AOL Tech, possibly including smaller assets like TUAW and Joystiq.

The asking price? A hefty $70 million to $100 million.

AOL is hoping to make something off the drama of the past couple of years: $70 million would net the struggling Internet company about $10 million profit on what AOL originally paid for both TechCrunch and Engadget's original parent Weblogs Inc. According to one source, AOL management has been seriously considering the move since early this year. The news also sheds light on why Arianna Huffington was so relaxed about relinquishing responsibility for the division last month, according to reports.

Possibly acknowledging that finding a buyer might take time, the company will be evaluating the potential sale over the next six months to a year. That said, we're told AOL management would prefer to move quicker if the right deal came in the door.

Still, even with an extended timeline, $70 million may be a tough sell. While the brand recognition of both Engadget and TechCrunch remain strong, the revenue side of the AOL Tech business has been hit hard in recent months. TechCrunch has now lost almost all of its internal revenue generating team. The departure of CEO Heather Harde and Advertising Director Vaughn Brown (to competitor The Verge) struck a huge blow to AOL Tech's bottom line, but the company remained committed to TechCrunch so long as its conference business remained robust. In the past few weeks, however, long-time conference coordinator Tanya Porquez and Strategic Partnership Director Jeanne Logozzo have both tendered their resignations. (Logozzo is selling sponsorships for several clients now, including PandoDaily.)

The timing of those departures is significant, coming just weeks before Disrupt New York, TechCrunch's second biggest conference of the year. Last year at Disrupt San Francisco TechCrunch had 80 sponsors according to the event program. You can see from the Disrupt New York Web site that the number is nowhere near that big. I count fewer than 30.

In a smart attempt to boost ticket sales and sponsorships, TechCrunch editor Eric Eldon was able to overrule the objections of AOL higher-ups and temporarily hire TechCrunch founder Michael Arrington back to co-host the event. We've even learnt that Heather Harde was brought in at the last minute to help vet the startups for the Startup Battlefield.

Actually, bringing Arrington back into the fold is a smart move for more reasons than one: One source who has expressed interest in buying the properties said raising the money wasn't the hard part. The hard part is finding a strong editorial figurehead to be at the helm. Founders carry the most weight in the tech world, so getting Arrington back to TechCrunch might be AOL's only hope for a sale.

Still, despite the drop in revenues and uncertainty over Arrington's future role (he is committed to being a VC through his fund, CrunchFund), AOL continues to pump money into AOL Tech possibly in preparation for a sale. The budget bump has allowed TechCrunch's Eldon to hire a raft of new reporters to arrest the site's traffic decline and, we hear, nearly double the salaries of several long-term staffers who have committed to remain on board. We heard from one AOL Tech employee that, to stem the tide of departures, staffers are also being invited to "pick our own job titles" and there's a new free-spending vibe that's in marked contrast to the more austere (and profitable) Heather Harde regime. "We're just having fun and spending AOL's money while we can," this person told us.

Our sources are unaware of any serious bidders right now, but there's been plenty of flirting with the idea. Recent stumbles aside, the division represents a whopping 20 million unique visitors a month and two of the largest brands in tech news. We heard from one source that Kara Swisher was kicking some tires to add the brands to the expanding All Things D franchise. [Update: Swisher has emailed to say our source's tip about her interest in TechCrunch is "false" and that she categorically has not made any approach to AOL. However in a series of tweets, she acknowledges that Armstong called her to discuss a possible 'partnership'.] Another well-placed source with access to capital admitted to being interested in resuscitating the brands, but not at a $70 million price tag.

Last year, Michael Arrington and Heather Harde mounted an unsuccessful bid to buy back TechCrunch. With Huffington no longer part of the equation, it's certainly feasible that one or both of them might try again to regain control. That said, we reached to Michael Arrington who gave us the following response on the condition we quoted him in full...

"I don't know anything. No one tells me anything. I am not in the least bit interested [in buying back TechCrunch]. I was Team Pando all the way until Sarah Lacy fired me. That does not change my position on TechCrunch."

But while other tech blogs might like the page views, a deal this size would require a whopping capital round, and there are only so many blogs that have the financial wherewithal to pull it off. The Verge's parent company Vox Media might have access to the capital, but having already hired many of Engadget's brightest stars, it's not clear they need to spend $70 million on the rest of them. CBS Interactive could also make a run if it wants to breathe more life into CNET but, again, there's no suggestion that they're interested.

As news of AOL's plans spread, there's no doubt that more serious potential buyers will emerge. Indeed, not long after PandoDaily first heard rumors of the proposed sale, we were approached by one such suitor who wanted to gauge our interest in participating in a bid. We declined.

Additional reporting by Paul Carr.

[Disclosures: Several PandoDaily editors and contributors -- including Sarah Lacy and Paul Carr -- previously worked at TechCrunch. TechCrunch founder Michael Arrington remains an investor in PandoDaily, through CrunchFund]