CNN Acquires iPad App Developer Zite

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CNN has acquired technology company Zite, a developer of a news app for Apple's iPad that provides a personalized "magazine-like" experience.

Terms of the deal were not disclosed. Last week, blog site TechVibes reported that CNN was in talks to acquire Zite for $20 million to $25 million.

San Francisco-based Zite -- which has fewer than 10 employees -- will become a wholly owned subsidiary of CNN.

Zite app for iPad

The Zite application, available for free on the iPad, provides news content from a variety of sources across the Web tailored for individual users by analyzing their preferences.

In March 2011, Zite received a cease-and-desist letter from a group of media companies -- including Time Warner Inc. (parent of CNN), The Washington Post, AP, Dow Jones and Getty Images -- asserting that the startup was "misappropriating" their intellectual property.

Zite "responded immediately" to the cease-and-desist notification, according to a CNN spokeswoman, and "hasn't heard any concerns from those publishers" since. Zite changed the app to link to news stories from those companies rather than presenting them in "reading mode" directly within the app.

"Zite represents the next generation of content discovery and personalized publishing, and CNN wants to help lead in that space," CNN Digital general manager KC Estenson said in announcing the deal. "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."

Zite competes with Flipboard, another iPad app that is designed to deliver customized news content by analyzing links shared by users on Facebook and Twitter.

Zite CEO Mark Johnson will continue to run the startup's day-to-day operations out of San Francisco, reporting to Estenson. Zite founder Ali Davar remain with the company as executive director and Mike Klass will continue to lead Zite's technology R&D as chief technology officer.

Zite is based in San Francisco with offices in Vancouver, British Columbia, Canada. The company was founded in 2005 as a part-time research project by students at the University of British Columbia; the current incarnation of Zite began in 2010.

Zite has received approximately $4 million in total funding, including some grants from Canada's National Research Council, PRECARN and MITACS.