Newspaper Giants Grab HeadHunter for US$200m

Moving to build a dominant online and offline job-recruitment service to rival Monster.com, two major U.S. newspaper chains, Knight Ridder and Tribune Co., have struck a deal to acquire employment site HeadHunter.net for $200 million in cash.

Joining the two media companies in the acquisition is their jointly owned CareerBuilder online job site, acquired one year ago year, which has 4 million monthly visitors. HeadHunter has about 2.4 million monthly visitors.

In a conference call with analysts and reporters, executives outlined an all-out challenge to sector leader Monster.com. They described a broad Web and print strategy to unite HeadHunter.net’s ad base and job-seeker traffic with that of CareerBuilder and their combined 44 newspapers.

They also said they’d build their newspaper job sections around the CareerBuilder brand with the planned launch next month of branded CareerBuilder employment sections in Sunday editions.

The combination is expected to make CareerBuidler the No. 2 employment site behind Monster. TMP Worldwide Inc. , Monster’s parent, recently agreed to acquire HotJobs and is expected to close on that $400 million deal in the coming weeks.

“Our mantra has been to create the Pepsi-Coke challenge” of the employment-ad market, said Rob McGovern, CEO of CareerBuilder. “It’s now us and them, CareerBuilder and Monster, and the race is on.” He said the 6.4 million combined monthly visitors And combined 25,000 ad-buying customers of CareerBuilder and HeadHunter, along with their combined print and online sales forces, will bring it to “near parity” with Monster.

Knight Ridder is the nation’s second largest newspaper chain with 32 papers, including the Miami Herald and the Detroit Free Press. Tribune is a holding company with 12 big-city newspapers including Chicago Tribune, Newsday and the Los Angeles Times, as well as TV, radio and Internet properties.

Newspaper publishers once had the lock on local help-wanted advertising. But that strong position has been eroded over the past several years with the rise of the Internet and aggressive online competition. Instead of sticking with only print, papers are trying to create a competitive alternative by leveraging their local domination of ad markets and pairing them with the broader reach of the Web.

The strategy outlined today by Tribune, Knight Ridder and CareerBuilder execs should appeal to buyers of job ads –namely, large corporations that want to reach a wide audience– and job seekers, who want a comprehensive and up-to-date source for finding a job.

Marketing will extend across all media channels owned by the companies, including print, TV, radio and the Internet. Sales will be conducted by a combined 200-person team calling on corporate accounts and 500 in-bounds sales people spread mostly among the various local newspapers in the chains.

Executives said when someone calls the chain’s newspaper to place a print help-wanted ad, they have an 84% success rate selling them an online ad to compliment it. Today’s deal could make adding an online ad component a more attractive proposition as it would reach a broader audience.

Knight Ridder CEO Tony Ridder called the deal a “watershed event.” He added, “The acquisition of HeadHunter is about more than numbers. It’s repositioning of CareerBuilder as a distinct number two (career site).” He said the combination of the Web sites, the rebranded newspaper help wanted sections and their combined sales forces all foretell a battle for the top position in the job-ad market.

John Madigan, chairman and CEO of Tribune, said, “Newspapers have long been the first place people turn when looking for a job and the acquisition of Headhunter will enable us to continue building our share of the fastest-growing segment of that market – online recruitment advertising – while maintaining our leadership position in print.”

The terms of the deal outlined Friday have HeadHunter being acquired for $9.25 per share in cash. Knight Ridder and Tribune will each contribute half of the purchase price. The acquiring entity will be a newly formed subsidiary of CareerBuilder’s parent, Career Holdings Inc.

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