Meredith Corp. agreed to buy Allrecipes.com, paying Reader's Digest Association $175 million in a deal that more than doubles the size of its digital footprint.
As a leading site in a crowded food space, Allrecipes was a crown jewel for RDA that reportedly generated interest from a number of potential suitors, including Random House and Scripps Interactive. The selling price is almost three times what RDA paid for the user-generated recipe site in 2006.
The parent of such mass-reach women's brands like Better Homes and Gardens and Parents, Meredith has been on a buying spree lately as it seeks to deepen its reach with its female consumers. In the past few months, it snapped up Every Day With Rachael Ray from RDA for what was believed to be in the neighborhood of $5 million. It also recently launched Recipe.com, bought EatingWell Media Group and introduced six new special interest food titles.
The Allrecipes purchase is its biggest move yet, though. Its addition will almost double the digital revenue generated by Meredith’s Women’s Network and more than double the network’s audience to about 40 million monthly unique visitors, according to the company. It also has the No. 1 video channel on YouTube, according to Meredith. Led by president Lisa Sharples, Seattle-based AllRecipes employs a staff of about 150 people, which is expected to stay intact.
"This is about owning the food category," said Liz Schimel, chief digital officer for Meredith, who will oversee Allrecipes. "But it's also about digital scale. That's a very critical aspect of this."
However, some of Allrecipes' numbers aren't as appealing as they once were. Allrecipes' year-over-year operating income fell in the first nine months of 2011, to $2 million on revenue of $18 million, according to RDA's financial filings. RDA CEO Robert Guth admitted in a conference call to discuss third-quarter 2011 results that the site's growth wasn't up to expectations. He blamed "headwinds" in the space that have affected Allrecipes along with others.
As for where the Allrecipes deal leaves the nascent Recipe.com, which at 2 million monthly uniques is tiny by comparison, Schimel said she sees them as complementary. Recipe.com's recipes come from magazines and food brands, while Allrecipes' content is user-generated.
As for RDA, it could use the proceeds from the sale. The company exited bankruptcy last year and under Guth has been selling off its parts except for so-called core assets, its flagship Reader’s Digest, Taste of Home and The Family Handyman.
RDA is still looking at selling its Weekly Reader and Lifestyle & Entertainment Direct divisions, and in an interview with Adweek, Guth said he'd also look at licensing some of Reader's Digest's overseas editions, as it did with its U.K. edition in 2010.
"We'll always be a publisher internationally, but we will consider different structures," he said. "That could even out the profitability."