Cyclingnews: Aussie Web 1.0 success story

You probably won't see this story in much of the trade press, but one of the quiet achievers of the Australian corner of the Internet has just had what sounds like a very satisfactory and lucrative exit. Knapp Communications, based in the inner-city Sydney suburb of Surry Hills, has sold the bicycle news Web site cyclingnews.com to UK-based Future Publishing for £2.2 million (A$5.2 million, US$4.4 million).

Proprietor Gerard Knapp's post on CN about the acquisition lays out the operational details of the deal, whereas the Future press release goes through the business side of it, along with some surprisingly revealing numbers.

In 2006 it attracted an average of 30 million page impressions each month, representing approximately 500,000 unique visitors. The majority of its revenues are generated from advertising on the website. For the year ended 30 June 2006 revenues were A$1.5m and EBITDA was A$0.4m.

The acquisition price is thus a multiple of 13 times EBITDA and 3.5 times revenue, which may seem low in these heady times of Web 2.0 but is a respectable number for a publishing business. As for the multiple on what Gerard paid for the site from founder Professor Bill Mitchell back in 1999, I know what that is because I was working for Gerard on his other business at the time, but I won't say exactly how humungous that is! ;)

On edition #20 of The Spokesmen podcast several industry types discuss the acquisition, and aside from some snide remarks about the "dreadful" old school design of the site hurting their eyes, they make good points about CN's proudly internationalist strategy (which means they thrash main competitor VeloNews outside the US) and the invaluable back catalogue of content stretching back since 1995 which is all online free of charge. Both of these things are rare in an Australian publishing venture.

Congratulations to Gerard and his team. I know first-hand how much of himself he has put into his work for many years now. I only wish I could have his drive and stamina. He should be held up as a model for what hard work and the right moves at the right time can do for an entrepreneur and his business.