Associated Newspapers expands online

Associated Newspapers, the newspaper division of DMGT, has paid ?46.5m for two internet businesses to capitalise on the surge in online advertising.

The two companies are Allegran, a collection of internet dating services, and Data Media and Retail, which owns portals that feature automotive classified advertisements. Associated believes they will enhance its earnings this fiscal year.

The latest deals follow DMGT?s ?106m acquisition last month of Genscape, another new media venture, which supplies real-time information about energy generation to traders in Europe and North America.

Traditional media companies in Europe and the US have been ramping up their internet investments to recapture viewers and advertising dollars that have migrated to the web.

In December, ITV, the broadcaster, made waves when it paid ?120m for Friends Reunited, a website that brings together former schoolmates. Under the terms of the deal, ITV could pay up to ?55m more in 2009 depending on the site?s performance.

Meanwhile, News Corp, NBC Universal, Viacom and other global media companies have made a string of acquisitions in the past year, spending billions of dollars to acquire MySpace, iVillage, Neopets and other sites.

Newspaper publishers have been particularly pressed by the internet. Circulation has been declining at UK and US newspapers while new competitors, such as Monster.com and Craigslist have moved into the lucrative classified advertising market.

In Allegran, Associated will be getting three dating sites that ranked in the top seven in the UK, according to Hitwise, an internet consultancy. Since January 31, the company has generated ?7.4m in revenues, up twofold on a year ago.

DMR, which operates such sites as Carsource.co.uk, has generated ?4.3m in revenue since November 2005, a 40 per cent increase on the previous year. Under the agreement, Associated has bought a 62.5 per cent stake in DMR outright, and will acquire the remainder through a three-year earn-out.

DMGT?s non-newspaper businesses last year accounted for 44 per cent of total revenues, up from 15 per cent 10 years ago.