Two years after buying Elite Daily, the Daily Mail says the Facebook publisher is worthless

Elite Daily used to look like a digital publishing success story: Founded by a couple of twentysomethings in 2012, fueled by Facebook growth, then sold for many millions a few years later.

Now it is a cautionary tale: The owner of the Daily Mail, the publisher that bought Elite Daily in January 2015, says the New York-based startup has been a bust, and has written down all of its investment in the money-losing company, citing “poor performance.”

It is taking a $31 million loss in the process.

Elite Daily was one of several companies that figured out how to tap into Facebook to supersize growth a few years ago, generating clicks with high-volume, low-brow, dude-friendly content.

Jon Steinberg, who was running the Daily Mail’s U.S. operations at the time it bought Elite Daily, told Business Insider that buying the startup meant that “now we have 50 percent of all millennials in the U.S. coming to one of our sites.”

Steinberg left the Daily Mail a year later and is now running Cheddar, a video news startup.

Daily Mail and General Trust, the Daily Mail’s U.K.-based parent company, says Elite Daily continues to grow and that revenue increased 44 percent in the last year to $12.6 million. But “audience retention and revenue growth have been disappointing and losses have exceeded expectations,” leading to the write-off.

That’s a big switch from January of this year, when Daily Mail and General Trust CFO Stephen Daintith said the site was doing well, even though its traffic had decreased. Via AdAge:

“We're ... pleased with how Elite Daily is performing," [Daintith] told analysts on an earnings call. He said the site is "proving to be a very important asset" for the company.

Mr. Daintith, on the earnings call, explained how the Elite Daily purchased has played into the company's U.S. advertising strategy. "Part of the reason why we bought Elite Daily was to strengthen the advertising pitch with the audience, the combined audience for Elite Daily and MailOnline in the U.S., and that seems to be working very well for us," he said. "So, very pleased with progress in the U.S."

Reports at the time of Elite Daily’s sale pegged the price at $40 million to $50 million. But a financial report from the Daily Mail and General Trust says the company paid 17.6 million pounds for the company — about $26 million dollars at 2015 exchange rates.

It’s possible that retention bonuses or other payouts that don’t show up on the acquiring company’s books account for the discrepancy.

This article originally appeared on Recode.net.

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