I talked to an insider on the Flixster negotiations, and despite CEO Joe Greenstein's suggestion that the company is not for sale, I’ve learned that the price they’re seeking is $100 million.
That’s right, and that makes the asking price a very large multiple based on revenue of $10 million a year. Flixster, a leading social media site in the movie space, may have the cool factor of new media -- and Rotten Tomatoes to boot -- but for the moment it still has no profits, according to an individual who has seen revenue documents.
I wrote Joe Greenstein to check these facts. He wrote back: "We are not interested in commenting on any of the recent speculation about our business." But he added that they are, in fact, profitable. However, he would not provide details.
Interestingly, a source at Warner Bros. told me last week that one reported figure - $90 million -- was way too high.
But I’m inclined to think that it isn’t.
Read also: Warner Bros. May Buy Flixster - What's With All the Embracing the Future?
The two sides are negotiating and a deal is said to still be weeks away, should it close at all. Greenstein would do well to get another bidder in the game if he's really looking to close a number that large.
An executive from another company who looked at the sale concluded that even at $10 million, there is no easy way for Flixster to arrive at profitability.
The site, with 20 million registered users, is one of the most popular movie social media sites with the tagline: “Watch movies. Tell friends.”
Even without a forseeable profit, may well be worthwhile for Warner’s to purchase as a quick way to get deeply hooked into in the digital and social media game.
As part of a larger digital strategy, away from the downward spiral of DVD sales, I still think it's a smart move.
