Pop culture Web sites the supermarket tabloids of the digital age have changed the landscape of entertainment news thanks to their scandalous photos of young starlets and salacious reports on the latest celebrity breakup.
Leading the pack is Perez Hilton real name Mario Lavandeira who launched his Web site in 2004. But many followed, including publisher BuzzMedia Inc., which is buying up pop culture sites here, there and everywhere to build an empire of online gossip.
That included the purchase of a series of Web sites, including TheSuperficial.com, which triggered a lawsuit that highlights the potential value of such sites whether real or imagined.
BuzzMedia of Hollywood purchased TheSuperficial which features bawdy commentary on celebrity antics accompanied by paparazzi-style photos from Irvine-based online publisher Anticlown Media LLC for more than $2.7 million in September 2008.
BuzzMedia alleges in a Los Angeles Superior Court lawsuit filed last month that Anticlown owner Karl Wang engaged in fraudulent negotiating tactics during talks over the sale of TheSuperficial. The lawsuit alleges that Wang falsely claimed that he could sell the site to L.A. online advertiser Gorilla Nation Media LLC for $2.7 million if BuzzMedia didn’t exercise its right of first refusal, a tactic supposedly designed to drive up the price.
Tyler Goldman, chief executive of BuzzMedia, declined to comment on the pending litigation. Representatives from Anticlown, which publishes other sites such as Geekologie.com and IWatchStuff.com, did not return e-mails seeking comment on the suit. Gorilla Nation Chief Executive Aaron Broder also declined to comment.
Raunchy tone
The commentary posted on TheSuperficial is peppered with somewhat vulgar language describing female celebrities, but can also target male stars.
Founder Wang established the tone of the Web site when it was launched in 2004.
People visiting the site would often post comments in keeping with the raunchy tone. Somehow that tone managed to capture the Zeitgeist, and gained an audience, and in 2006 Chicago Tribune technology critic Steve Johnson named it one of the best 50 celebrity, news or sports Web sites. He called it “hilarious.”
That may have brought TheSuperficial to BuzzMedia’s attention, and at some point the company acquired a right of first refusal for the site. And that’s the key point in the lawsuit.
BuzzMedia alleges that Anticlown claims Gorilla Nation offered to purchase TheSuperficial in July 2008. Under the purported deal, Gorilla Nation would have paid more than $2.7 million in a mostly cash deal. BuzzMedia claims it exercised its right by starting negotiations. The company then agreed to buy the site in a deal comparable with the one it believed was on the table with Gorilla Nation.
BuzzMedia claims in the lawsuit that once its purchase had closed, it discovered that Anticlown owner Wang had made false representations “so that BuzzMedia would enter into the contract and would pay an inflated price for the purchase of the assets under the contract based upon the purported firm offer.”
BuzzMedia claims it made a partial payment of $2.7 million toward the purchase of TheSuperficial, and since September 2008 has been developing and improving the site. The remainder of the payment isn’t specified in the suit.
The deal left Anticlown with an interest in the site, and the suit alleges that Anticlown is now wrongfully trying to sell the site from under BuzzMedia.
However, Goldman said the Anticlown deal hasn’t soured him on expansion through acquisition.
“Our focus is on building and owning our own properties,” Goldman said. “We’ve tackled music and celebrity, now we are looking at other areas in the pop culture arena from fashion to movies to sports.”
Musical beginnings
Anthony Batt, who helped launch CraigsList.com, started BuzzMedia originally known as BuzzNet in 2005.
BuzzNet began as a social media networking site geared toward music. Success of the site led to expansion in the music field, then expansion into celebrity gossip. The company now has a total of 23 original Web sites, including alternative music site AbsolutePunk.net and celebrity news site Celebuzz.com. The company name was changed to BuzzMedia to reflect its expanded portfolio.
The company also manages the official Web sites of fixtures on the celebrity gossip circuit including Britney Spears, Kim Kardashian and Tila Tequila.
BuzzMedia’s rise within the online celebrity market has partly been pushed along by Silicon Valley venture funds, a handful of which raised a new round of financing totaling $12.5 million in March.
The company’s in-house programmers help the company integrate its editorial and advertising content. The photos, news and music featured on the sites are produced by a team of 90 people. Each site has its own editorial team of experts on the subject, whether celebrities or music.
BuzzMedia has been hiring former executives from MTV, MySpace.com and online leader TMZ.com with the goal of becoming a force in the sector.
Among the sites the company purchased in a 2008 expansion drive were Idolator.com, StereoGum.com and AbsolutePunk and TheSuperficial.
Goldman said BuzzMedia is profitable and ranks among the middle tier of online publishing companies, but declined to provide any revenue figures.
“Our display advertising business has grown substantially quarter over quarter in the last few years,” he said.
