CNN acquires personalized iMag Zite

The news comes after rumors circulated last week about a potential $20-$25M deal

Rumors were swirling last week about a potential love match between CNN and Zite—to the tune of $20 to $25 million.  Today, the deal has been confirmed: CNN has acquired the iMag, although the terms of the deal have not been disclosed, so no word on whether CNN really did shell out $25 million.

Zite will continue to operate as a stand-alone business and the management team will continue to run the show as usual: Mark Johnson will continue to oversee the company as CEO, founder Ali Davar will stay on as Executive Director, and CTO Mike Klass will continue to lead Zite’s R&D.

“Zite represents the next generation of content discovery and personalized publishing and CNN wants to help lead in that space,” said CNN Digital GM KC Estenson, to whom Mark Johnson will be reporting from now on.  “We think we can advance the industry in a meaningful way that helps content creators grow their businesses while growing the distribution of a product that people already love. Zite’s technology can also be used to help CNN's Websites and apps serve more personalized content, making our current digital services even better.”

The acquisition is somewhat ironic given the fact that CNN’s parent company, Time Warner, was one of several major media companies that banded together to write a cease-and-desist letter to Zite for its use of their content a few months ago.  The problem—which more than one online and mobile content aggregator has run into—was that Zite was reformatting news articles to knock out annoying ads, which earned the wrath of companies like the Washington Post, AP, Gannett, The McClatchy Company, and more.

The Zite team was startled by the formal cease-and-desist letter, which would have been just as effective in a "one-line email," according to Mark Johnson.  But Zite made the necessary changes and now, with its legal woes in the past, Zite is back on track with a faster reading mode and a button on Web mode that takes you to reading mode.  It aims to be more than just a content aggregator; Zite wants to be a personalized iPad magazine, with articles drawn from the Web based on readers’ specific interests.  

Zite actually got its start several years ago as a by-product of Worio, a sort of personalized search engine that focused on delivering contextually relevant search results based on the keywords entered.  The technology was refined to produce Zite, which uses your social layer to push relevant, personalized content.  And as you read articles, you can continue to refine the personalization process by giving a thumbs up or thumbs down vote on each article (although the algorithm also considers what you don't click on when customizing the content for you). Over time the app will even begin to personalize your layout preferences, for example--if you prefer longer articles or short articles, etc. 

While Flipboard curates content that friends in your social graph are posting, Zite falls more in line with Pandora in that it delivers content based on your specific interests. In fact, at one point the company tested out Facebook integration, Davar told me, and the results proved to be more noisy than helpful.

"The results weren't representative of users' interests," he said. 

Zite's acquisition is a big vote of confidence in its technology.