MaxPreps to play on the next level; CBS buys El Dorado sports news firm
Mar 21, 2007

The Sacramento Bee

MaxPreps Inc., the fast-growing Cameron Park company that compiles high school sports news on the Web, has been acquired by CBS Corp. for an undisclosed sum, the companies announced Tuesday.

Signaling the heightened appeal of high school athletics, four-year-old MaxPreps will be folded into CBS' College Sports Television Networks Inc., an online and cable television business that covers college and high school sports.

MaxPreps will continue to operate out of its El Dorado County headquarters with its founder, Andy Beal, managing the operation.

"What's really exciting is that we will be part of a bigger company and have more resources that will help us build our brand," Beal said Tuesday.

That includes the ability to tap into CBS affiliate stations for high school sports news and video feeds that can be posted on the MaxPreps Web site, he said.

CSTV President Brian Bedol said the deal delivers to CBS "a highly desirable demographic" and a passionate fan base.

"The company is a terrific complement to CSTV's local and regional assets," Bedol said in a prepared statement. "At the same time, its content will help make CBS' local television stations and Web sites the 'go-to' place for local sports content in communities across the country."

MaxPreps specializes in gathering scores, statistics, rosters, scouting reports and other information about high school sports teams through a nationwide network of some 15,000 coaches, who post their team's results after every game. The emphasis is on mainstream high school sports, including football, basketball and baseball.

The information is posted on the company's Web site (www.maxpreps.com) and distributed free to newspapers, including The Sacramento Bee and other media outlets.

The catalyst for the CBS deal was $7 million in second-round venture funding that MaxPreps nailed down last July from West Sacramento-based DFJ Frontier and two East Coast venture funds, Beal said. DFJ also had led an earlier funding round totaling $3.2 million.

"Almost immediately (after the July investment), we started getting inquiries from most of the major sports media companies," he said.

Interest was spurred not only by the investment, Beal said, but by the increasingly high profile of high school athletics.

Beal declined to name other companies that approached MaxPreps but said the CBS talks quickly escalated.

"It became serious enough that in November we engaged an investment banker to explore our opportunities," Beal said.

After what Beal described as smooth negotiations, CBS and MaxPreps signed the deal on March 10.

While declining to disclose sales terms, both Beal and DFJ Frontier partner Scott Lenet said they were pleased by the price.

Lenet said he, Beal and other investors hadn't expected to sell MaxPreps so soon, but the CBS offer, as well as the network's size and capabilities, made it too tempting to pass up.

"In CBS' hands, they can do a lot ... and make MaxPreps very successful," he said.

MaxPreps is an outgrowth of the former Waveshift Inc., a company specializing in software that helped newspapers manage community event listings. The McClatchy Co., owner of The Sacramento Bee, was an investor in Waveshift and purchased the event-listing software and other assets from Beal in May 2002.

Beal, using his software and database background, started SacPreps the following September to focus on Sacramento-area high school sports. The following year, the name was changed to MaxPreps and Beal began expanding its Web-based coverage to other regions of the country.

MaxPreps currently posts high school coverage from all 50 states. In addition, MaxPreps has a content sharing agreement with USA Today.

The company also issues team rankings and posts videos and photos of top prep performers. Since its launch, MaxPreps has grown to 37 employees and its Web site averages about 35 million page views a month by 1.5 million separate users, according to the company.

Financial research firm Dun & Bradstreet estimates annual revenue for the privately held MaxPreps at about $2.1 million, which Beal confirmed as "in the right range." About 90 percent of MaxPreps' revenue comes from advertising, Beal said, with the remainder from selling merchandise and photos.

Beal said high school athletes compose about half of MaxPreps' online audience, with the rest a combination of coaches, parents and others.

The deal marks the most recent in a string of acquisitions of area technology firms. Others sold in the last eight months include CoreLogic Systems Inc., Serious Magic Inc., Sierra Logic Inc. and International DisplayWorks Inc.

But CBS' stature could help this deal transcend the others, in terms of its impact on the region's reputation, said Oleg Kaganovich, chief executive of the Sacramento Area Regional Technology Alliance.

"As a brand, CBS is right up there with Coca-Cola and Nike," Kaganovich said. "It's this type of deal that will bring more visibility to the region and bring in more investors and more human capital."

It may be too early to tell if New York-based CBS will impose a more buttoned-down corporate culture on MaxPreps, but Beal doesn't appear overly concerned.

"I hope they don't," he joked. "I like wearing shorts to work."