I read on TechCrunch that Twitter’s latest round of funding values the company at $1 billion. This leads me to wonder about the widening valuation gap between new and old media.
I am not one to denigrate Twitter. I use it, enjoy it, and wrote a piece more than a year ago entitled “Why Twitter Matters.”
But think about this: Twitter is still hunting for revenue and a business model, and it’s valued at $1 billion. BusinessWeek, even during a massive adverting recession, has estimated ad revenues this year of $80.5 million, a quarter of it from online. I have no idea how much McGraw-Hill will fetch for BW in the sale, which is supposed to conclude within weeks. But at least one estimate has been as low as $1.
To be fair, BW is losing as much as $60 million this year. And Twitter, conceivably, could continue to grow, becoming an enduring global platform for communication and search. But by the same logic that drives bottom-feeders like Wilbur Ross to buy companies like Bethlehem Steel, the gap between Twitter’s valuation and BW’s might well narrow.