CNN Said to Get Flipboard Stake in Sale of Zite

Photograph by PRNewsFoto/Flipboard

Zite co-founders Mike Klaas (left) and CEO Mike McCue develop popular mobile apps for news reading.

CNN sold its software unit Zite to Flipboard, which makes a competing news-reader application, in a deal that gives the media company a small equity stake in the startup, according to a person with direct knowledge of the matter.

No cash was exchanged in the deal, according to the person who asked not to be named because the talks were private. Instead, the two companies agreed to advertising and content arrangements in addition to the equity stake, this person said. Time Warner’s CNN had acquired Zite, which makes mobile apps for browsing news stories based on the user’s reading history, in 2011 for $20 million, the person said.

Flipboard, led by CEO Mike McCue, republishes content from magazines and newspapers in its own apps, and shares ad revenue with the publishers. The startup plans to create new custom magazines based on some of CNN’s shows such as “Fareed Zakaria GPS.”

Under Jeff Zucker, CNN has more aggressively pursued digital deals to help the global news company expand the reach of its coverage. It recently entered into a partnership with Dataminr, a startup that mines Twitter posts, to track breaking news ahead of the competition.

Earlier reports pegged the deal with Flipboard at $60 million. Matt Dornic, a spokesman for CNN, said the reported numbers are incorrect and declined to comment on CNN’s stake in Flipboard. Marci McCue, a spokeswoman for Flipboard, declined to comment.

—With assistance from Adam Satariano in San Francisco

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