Web 3.0 & McClatchy (Part 4)

Acquisition Targets

McClatchy’s strongest asset is CareerBuilder. Though CareerBuilder is the number one job site in the US it lacks community features and McClatchy along with its partners could consider acquiring professional networkin sites like LinkedIn, Xing, etc., which have very good community features to enhance CareerBuilder. Sequoia Capital, Greylock, the European Founders Fund, and Bessemer Venture Partners have funded LinkedIn. Xing is traded on the Frankfurt & Xetra stock exchanges.

The Company could also consider acquiring Project Exchanges like eLance, oDesk, and Guru, which have created marketplaces for freelance projects, yet another nuance on the job search phenomenon.

CareerBuilder is in a very strong position, and should be able to put together a nice roll-up of the Online Jobs space, and plenty of private equity players would be willing to finance such a move.

McClatchy could consider acquiring more real estate sites from Classified Ventures. ZipRealty, Trulia, RealtyTrac, Zillow, are some key acquisition targets in the real estate space. Zillow has raised $57 million in funding till date. Trulia recently raised $10 million in Series C funding led by Sequoia Capital. The site has raised $17.7M in total VC funding since 2004. ZipRealty was ranked 9th in the HitWise survey of Top Real Estate sites in the US in February 2007. ZipRealty is traded on the NASDAQ and has a market cap of $160 million. Most of these are going to be fairly expensive to go after, with gobs of VC money to rationalize. Oddly enough, ZipRealty, the public company, may be easier to acquire.

In the Online Auto space the Company could consider acquiring sites like CarGurus, Pcars, etc. to combine with Cars.com, which it already owns as part of Classified Ventures.

Again, from a financial engineering point of view, Classified Ventures may turn out to be a good vehicle that can be spun off as a subsidiary, funded with Private Equity, and another roll-up can be pulled together quite convincingly and attractively.

McClatchy, like Gannett doesn’t have much of a presence in the online matchmaking or dating space and it could look at acquiring a site. McClatchy could consider acquiring sites like, OkCupid, Engage, Meetic, etc.

OkCupid is the fastest growing free, online dating site in the United States with more than 2 million monthly unique users and 500,000 active users. The dating site recently completed a $6 million in Series A funding from a group of angel investors. Engage has closed a $5 million venture funding led by The Founders Fund and Revolution Ventures. Meetic was listed on the European stock exchange, Euronext, in 2005.

One of the biggest and most successful players in the space, of course, is eHarmony, funded by Sequoia Capital, and harbors ambitions of going public. The company already has a revenue of $200 Million. Recently, a Match.com brand Chemistry.com has started going after eHarmony with an aggressive television campaign focused on “eHarmony rejects”. I had no idea that eHarmony rejects enough people for this new brand to position an entire campaign around that message.

Nonetheless, it reinforces the massive growth in the online dating segment, and there is no reason for McClatchy not to play in it, since Personals have always been a part of the community Newspapers’ bread and butter.

Business and Finance is another space where the Company is not present on the Internet and it could look at making acquisitions as it is a rapidly growing segment. Key acquisition targets for McClatchy in the business and finance space will be companies like Kiplinger, TheStreet.com, etc.

It could also consider acquiring finance blogs like Seeking Alpha, PhatInvestor, etc. A roundup of the financial media space can be found here. You’ll see, that not many of the larger financial media sites are independent at this point. Fool.com, however, is still independent, and its investors may sell.

TheStreet.com (TSCM) or Fool.com, however, are relatively larger acquisitions, and McClatchy would need some financial engineering to pull those off, not to mention the tough task of managing Jim Cramer’s personality!

McClatchy could also consider acquisitions in the online sports space. Being a newspaper conglomerate, the Company could consider building a niche position in local sports. It could also kick the effort off this by acquiring an online sports community site. The key targets for acquisition in the sports space could be Yardbarker, PicksPal, Takkle, BallHype, etc.

Yardbarker, a social sports news and opinion web site has raised seed funding from an impressive lineup of angel investors, which included Russ Siegelman, Ron Conway, Steve Blank, Ronnie Lott and Harris Barton. Early-stage venture capital firm Labrador Ventures also participated.

PicksPal is a social networking site and it has created a virtual gathering place for sports fans to prove who really knows their American sports. BallHype is a sports news and social networking site that allows users to post sports related stories and other users to vote / rate those stories up or down, and add comments.

All these are relatively smaller acquisitions, and well within McClatchy’s means, even though it doesn’t have a lot of cash sitting around in the parent entity.

(To Be Continued)

[Part 1] [Part 2] [Part 3]

This segment is part 4 in the series : Web 3.0 & McClatchy
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