Tribune's Online Realty Play (IACI, MOVE, SOLD, TRB, ZIPR)

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Includes: IAC, LEDR, MOVE, TRBCQ, ZIPR
by: David Jackson

Tribune Company (TRB) said that it has acquired realty site ForSaleByOwner.com. The press release didn't reveal the price paid, and gave outdated traffic stats -- "In 2005, ForSaleByOwner.com had more than 1.6 million average monthly unique visitors, making it a top 10 real estate site according to comScore Media Metrix". Four stock-related points to note:

1. Competition

ForSaleByOwner.com most directly competes with Owners.com, which, according to the WSJ (paid sub. req'd), "recently joined with RealEstate.com, a unit of IAC/Interactive Corp. (IACI), to connect consumers with local real-estate agents willing to provide sellers with an estimate of their home's value at no charge." It indirectly competes with traditional realtors and firms like Zip Realty (NASDAQ:ZIPR), Homestore (NASDAQ:MOVE) and HouseValues (SOLD). Google (NASDAQ:GOOG) also seems to be offering real estate listings on its search engine.

According to the WSJ article cited above, "To underscore the case for using a broker, the National Association of Realtors, which represents licensed real-estate brokers and agents, is spending $25 million this year on a television and radio campaign that focuses on the obstacles of selling a home on your own and the benefits of using a Realtor." Sounds like desparation to me.

2. Synergies

An interesting aspect of ForSaleByOwner was overlooked by most of the reports of the acquisition: the company distributes a magazine in selected markets. From its web site:

If your home is in a market where For Sale By Owner.com has a mass-distributed magazine, your home's exposure will be even greater because they can be found at thousands of locations frequented by buyers that include grocery stores, shopping centers, convenience stores and restaurants (the magazine is in over 40 markets nationwide).

Tribune should be able to reduce ForSaleByOwner's printing costs and increase its distribution by bundling the free magazine with newspapers.

3. Newspaper Stocks Becoming Internet Stocks?

Tribune has the following investments in private companies (COMPANY NAME, description, % owned by TRB):

  1. BOODLE/CONSUMER NETWORKS (Distributor of Online Coupons) 17%
  2. BRASSRING (Recruitment and Education Management Services) 27%
  3. CAREERBUILDER (Online Recruitment Services) 33%
  4. CLASSIFIED VENTURES (Online Auto and Real Estate Services) 28%
  5. SHOPLOCAL (Online Retail Advertising) 33%
  6. LEGACY.COM (Online Memorials) 33%
  7. TOPIX.NET (Online Aggregator of News & Information) 25%
  8. YELLOWBRIX (Online Content Aggregator) 18%

4. Partners

PaidContent writes "Note that the acquisition wasn’t through Classified Ventures, the joint venture between Tribune, Gannett, Knight Ridder/McClatchy, Belo and WaPO, which between them own CareerBuilder.com, Cars.com, Apartments.com and others. Not sure if this means anything (implication of the Knight Ridder buyout?)…or just that the site was too small for others to chip in."