Shopping comparison site Shopzilla is being acquired by The E. W. Scripps Co. Scripps says it is “moving to capitalize on the rapid growth and rising profitability of specialized Internet search businesses.”

Scripps will pay $525 million in cash for 100% of Shopzilla. Shopzilla shareholders will also receive the amount of Shopzilla’s net working capital at the time of closing, which is expected to be about $35 million.

The transaction is expected to be completed early in the third quarter. Shopzilla will become a stand-alone operating unit of Scripps.

Founded in 1996, Shopzilla, formerly BizRate, is a privately held company that is expected to generate $30 million to $33 million in EBITDA profit, also excluding investment results and unusual items, on revenue of $130 million to $140 million for the full year 2005.

The majority of Shopzilla’s revenue is derived from referral fees paid by participating online retailers. A fee is collected by Shopzilla when a consumer is directed to a retailer’s online store. Shopzilla also powers shopping search at AOL, Lycos, Time Warner’s RoadRunner and others.

“Shopzilla is a significant Internet play for Scripps,” said Kenneth W. Lowe, president and CEO of Scripps. “In many ways, like our other media businesses, Shopzilla is a content company. By organizing shopping information so that consumers can buy almost any product from a wide variety of merchants, the Shopzilla team has taken commerce and content and melded the two together to produce an extremely compelling value proposition to consumers and merchants alike. As more consumers become aware of this service, we’re betting that Shopzilla will become the way that people shop online.”

In announcing the deal, Scripps said, “The addition of Shopzilla, which attracted 14 million unique visitors during April, represents a significant expansion of the Scripps Internet business. Scripps already is one of the top-50 drivers of web traffic through its combination of national and local online brands. Scripps national television network web sites include FoodNetwork.com, HGTV.com, DIYNetwork.com, fineliving.com, gactv.com and ShopatHomeTV.com. Scripps Internet brands also include United Media’s Comics.com and web sites operated by the company’s local newspapers and broadcast television stations.”

“Shopzilla sits at the intersection of two of the fastest growing sectors online, paid search and e-commerce,” said Chuck Davis, president and CEO of Shopzilla. “With the best technology focused on consumer needs, we’ve built a service that has the most products and merchants and does the heavy lifting so that consumers can save both time and money every time they visit. The by-product of this focus has been revenues, profits and growth rates that far outpace the industry.”

Shopzilla’s senior management team, including Davis and co-founders Farhad Mohit, who is chief product officer, and CTO Henri Asseily will continue to run the company after the acquisition by Scripps is completed. Other Shopzilla senior managers who will stay with the company include John Phelps, COO, and Brad Kates, CFO.

 

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