AOL to Acquire Content Personalization Startup Gravity for $83 Million

Tim Armstrong - P 2013
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The New York media firm expects to close the deal by the end of the first quarter.

AOL announced Thursday morning that it plans to acquire Gravity, a startup that helps online publishers personalize content for readers.

Through the deal, expected to close by the end of the first quarter, AOL has offered to pay $83 million for Gravity with an optional additional $7.7 million that would be deferred and paid out over two years. AOL will also acquire about $12 million of net operating losses, which would result in a future cash tax benefit to AOL of about $5 million.

Gravity, founded in 2009 by Myspace veterans Amit Kapur, Jim Benedetto and Steve Pearman, had raised nearly $21 million in venture funding.

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The company had developed technology to create an interest graph for people based on their search and social networking actions. It would then use that information to help digital publishers like USA Today provide personalized recommendations to readers.

Gravity recently released interest graph data it had gathered for people who subscribe to Comcast, Time Warner Cable, Hulu and Netflix. The company said it found that people who subscribe to cable through Time Warner have a stronger affinity to films, while Hulu audiences are less interested in sports. Netflix, on the other hand, drew techies and e-book readers.

AOL said it would integrate Gravity’s technology into its portfolio of publishing platforms, which include TechCrunch and The Huffington Post.

“The web is moving to the era of personal, and a personal web filter will reshape how consumers get information and services,” said AOL CEO Tim Armstrong. “Gravity is joining AOL to lead the personalization transformation of AOL's brands and platform partners.”

Gravity’s team would report to Luke Beatty, head of product for AOL Brand Group.