Digg CEO says company's not for sale

Jay Adelson, CEO of social news company Digg, has used a BusinessWeek interview to attempt to quash those long-standing acquisition rumors. From what he said, Digg is not for sale.

"Now I am pressured to keep costs reasonable and focus more on the top-line revenue, which we really haven't done ever," Adelson said to BusinessWeek's Spencer Ante, saying that he now hopes to make the company profitable in one year instead of two.

Not for sale? Riiiiiight.

It's an old (ha) Silicon Valley maxim that any company is for sale, assuming the right buyer comes along and offers the right deal. What's likely is that Digg has come to realize that in this economic climate, it's not going to get the price that Adelson and founder Kevin Rose want.

Digg raised a whopping $28.7 million in Series C funding in September, which Adelson and Rose said would go toward fueling a major site expansion. The company didn't disclose a post-round valuation, but VentureBeat heard that it was only $164 million--significantly less than the $250 to $300 million prices that were oft-whispered about in Valley social circles.

Here's my theory: The longer Digg waits for the perfect bid, the longer it's in danger of having its valuation chipped away. The truth is, it's not very difficult for a site to institute a "social news" feature or other form of Digg-like interaction. Current Media, after Digg spurned an acquisition offer, built Current News and now aggregates user-picked stories into an hourly TV show. Yahoo built Yahoo Buzz, which can propel stories to the front page of its portal. Some Google users occasionally report seeing experimental features in which they can vote on search results. There are smaller ones, too: Reddit, which sold early to Conde Nast, is still alive and kicking. A start-up called Kirtsy puts a girlier spin on the Digg model.

Adelson even remarked to BusinessWeek that buying some of these smaller social news sites could help make Digg stronger, especially now since the recession may make some of them dirt-cheap. "There are Digg clones around the world in every country," he said to Ante. "I could go into those markets and clean up those sites. If I needed more capital to do a deal, I could probably do it."

That, honestly, wouldn't be such a bad idea. Digg's biggest problem isn't user activity--it has one of the most loyal and addicted audiences on the Web--but the fact that its core user base is very niche. It experienced a surge in political traffic as election season rolled on, but its core is geek news; hot topics right now are screenshots from the movie Wolverine and airborne laser weapons.

[assman]

The core USED to be geek news. Digg has been moving toward mainstream for the past year. It can't really be compared to Slashdot anymore.