I’m on the record here as being in favor of hiring away
other people’s bloggers ("Coveting Thy Neighbor’s Blogger") and there was an entertaining Internet dust-up this
week about the next logical step: whether or not big media companies should buy
big blogs.

The recap:

Jeff
Segal on breakingviews.com
thinks that media companies should steer clear
of buying blogs right now because of some obvious risks. Blogs are tough to value, dependent on
writers with individual fan bases and also notoriously faddish. On top of that, he takes a gratuitous swing
at Gawker.

Felix
Salmon at Portfolio mag’s Market Movers
blog thinks that Segal is
"hilariously off base" and "utterly clueless."
He sees plenty of comparable transactions (Engadget, Freakonomics) and the
big blogs have good, old-fashioned revenue as a starting point for
valuations. He also points out that many
big blogs (including Gawker) have thrived after the departure of their founding
editors. Salmon says that acquisition
discussions are going on all the time and, once buyers’ and sellers’ price
expectations cross, we’ll start seeing some big blog acquisitions.

Gawker itself chimes in with hastily
composed rundown of the reasons why a few of the biggest blogs will never be
acquired
. Gawker: too
outsider-y. TechCrunch: really just one
guy. BoingBoing: really just three guys
and a gal. Weblogs.inc: already
acquired.

Based on my experience over the past six month, Segal comes
closest to the crux of the current M&A market: e-media companies (including blogs) do have estimable
valuations, but those valuations are too flippin’ high. Like
1999 high.

More than one company has recently expressed to me that
their value expectation starts at "$10-20 per unique visitor" and goes up from
there. In this environment, traditional
media players have a couple of options:

1. Get
in on the land grab. Discovery Networks
is a great example of this, with their Treehugger
and HowStuffWorks
acquisitions. Valuations be damned, if
you’re a multi-billion dollar cable network about to go public, you can pay up
for these properties and accelerate your online strategy to light speed.

2. Invest
in your own site instead. Most people I
talk to (who are not multi-billion dollar cable networks) think that valuations
have to come down. In the meantime, if
you have a sub-$15 CPM, you’re likely to get a better return on a $5 million
investment in your in-house product than the same money spent on a site with
300,000 to 500,000 uniques.

So Segal ends up being laughably wrong on all the specifics
but right on the recommendation. Everybody
but the deepest pockets probably has to wait for valuations to come down.