CNN is buying Zite – an iPad app that allows users to customize their news feed and create a personalized magazine experience. [1] According to some reports, the deal could be valued between $20-25 million. [2] CNN is owned by Time Warner (NYSE:TWX) and constitutes just under 7% to the company’s stock value according to our estimates. This amounts to a more than $2.5 billion value for CNN based on our $38.90 price estimate for Time Warner. While a $20 million acquisition for a $2.5+ billion business is no big deal for the company, it shows that Time Warner wants the right tools that will help deliver content to its customers and fend off other media companies like News Corp (NASDAQ:NWS), Viacom (NYSE:VIA) and CBS (NYSE:CBS).
Time Warner has mentioned that it will not clog the app with its own content, but we wouldn’t be surprised to see some preferential treatment. And with the amount of content skyrocketing, it will become essential to separate and prioritize what matters and then make then personalize this.
Our price estimate for Time Warner stands at $38.90, implying a premium of roughly 25% to the market price.
See our complete analysis for Time Warner’s stock.
Notes:- Time Warner’s CNN Buys IPad App Zite for Customizing News, Bloomberg, Aug 31 2011 [↩]
- Vancouver’s Zite to be acquired by CNN for $20-25 Million?, tech vibes, Aug 22 2011 [↩]
