Flipboard Acquires CNN's Zite for $60 Million in Bid to Consolidate Reader Market
Flipboard, an app that displays digital media in magazine-like form on tablets, is acquiring one of its smaller competitors, Zite, for a reported $60 million.
As part of the deal, Flipboard will get direct access to all CNN content, including video, as well as CNN personalities like Fareed Zakaria, John King and Jake Tapper will create their own magazines on the platform.
Flipboard did not confirm the purchase price, reported by CNNMoney, and CNN disputed it, but didn't provide any further information. CNNMoney later revised its post to say the deal "could be valued as high as $60 million over time."
Flipboard also declined to reveal the number of users or installs of Zite, which has been around nine years. "Zite was smaller than Flipboard by a decent number," said Flipboard CEO Mike McCue. But it has a "small and passionate user base."
Zite has 15 to 25 employees in San Francisco, the "majority" of which will join Flipboard. Flipboard will integrate the technology, but the product and the brand will go away.
"We will integrate the Zite technology into Flipboard," Mr. McCue said. "We will not continue to evolve Zite; instead we want to focus on a single product."
CNN acquired Zite in 2011 for just over $20 million and operated it as an independent company. Mr. McCue said the deal will help Flipboard grow.
CNN acquired Zite to expand distribution of CNN content; now that will happen through Flipboard. K.C. Estenson, general manager of CNN Digital, said he's not concerned about taking users away from CNN.com. "If anything this extends the ecology of CNN and does it in a premium way," he said.
The deal includes a partnership to sell ads. Flipboard's business purpose is to add value to publishers by selling brand ads at premium prices on tablets. As part of the deal, both CNN and Flipboard will sell ads against CNN's content going forward.