Scripps, owner of Shopzilla, announced preliminary earnings this morning:
Q4 2007 revenue for Scripps Interactive (Shopzilla and uSwitch) was $79.8m.
Q4 2006 revenue for Scripps Interactive (Shopzilla and uSwitch) was $86.6m.
Q4 2007 segment profit for Scripps Interactive (Shopzilla and uSwitch) was $25.1m.
Q4 2006 segment profit for Scripps Interactive (Shopzilla and uSwitch) was $28.3m.
According to the release, for the fulll year (2007), at Scripps Interactive, “Revenue was $256 million compared with $271 million in 2006. Segment profit was $39.7 million compared with $67.7 million in the previous year.”
Obviously these numbers aren’t going the direction Scripps was hoping for when it acquired Shopzilla and uSwitch. So is Shopzilla crumbling or is it uSwitch? Seems to be uSwitch.
Scripps said “The decline in Interactive Media revenue and segment profit during the fourth quarter was attributable solely to reduced online energy switching activity at uSwitch. Revenue and profitability improved year-over-year during the fourth quarter at Shopzilla.”
Scripps also said they will take a “charge against earnings for impairment of goodwill and other intangible assets related to losses and challenging business conditions at the company’s uSwitch subsidiary in the United Kingdom.”
Early in the 4th quarter of 2007, after Scripps announced that it was spinning out its faster growing segments (Interactive, National Cable Networks) a number of sources said that Scripps was shopping Shopzilla around. These rumors started after Scripps CEO Ken Lowe said “As far as Shopzilla and uSwitch, I think it gives us an opportunity to look a lot harder at those businesses and how they fit overall into our interactive strategy.” (Red Herring)
I never commented on the Shopzilla sale rumor as I didn’t think it would happen with the holiday season heating up. And now? If Shopzilla had tanked in the 4th quarter, I think it would have been over for Shopzilla. Lowe’s comments this morning, attributing the rough numbers from Interactive to uSwitch, seem to indicate that everything is at least ok at the shopping engine. It’ll be interesting to hear what details Scripps reveals about Shopzilla and uSwitch in the earnings call this morning.
In the long run, I think that Shopzilla can be an extremely attractive property for Scripps. Search is huge and the product search game is still being played out, with no clear winners. It would be premature for Scripps to sell of Shopzilla.
I think we’ll finally see some creative integration of Shopzilla into Scripps’ other properties in 2008. At the same time, Shopzilla will continue to struggle to break free of its PPC addiction and become a destination rather than a quick stop along the purchase path with no real lifetime value beyond a single session.
I’ll hedge my bets a bit, though, and say that if Scripps finds a buyer for uSwitch, it might just decide to offload Shopzilla as well. Scripps’ acquisition of Recipezaar was bundled under the Scripps Network brand, not Interactive. According to Paid Content, Ken Lowe had this to say of the acquisition: “Recipezaar, a $25 million acquisition, is very much in line with what the company will do going forward. Overall goal is to dominate on the web the way the company dominates certain categories on cable. The site is different form the main FoodNetwork.com, since it’s user-gen. Millions of uniques over the holiday season.”
Well, if Scripps is looking to emulate its success of cable properties like Food Network, HGTV, Fine Living, etc., Shopzilla would seem to have no place in Scripps’ future.