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News Corp Inks Deal with Opcity to Boost Digital Offerings

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News Corporation’s (NWSA - Free Report) fully-owned subsidiary Move, Inc. (operator of realton.com) has inked a deal to acquire real-estate technology platform Opcity for $210 million in a bid to grow its presence in the digital real-estate market.

With this deal, realtor.com will be able to expand its lead generation product portfolio by introducing the option of availing a concierge-based model that offers thoroughly-researched, transaction-ready leads to real-estate professionals. In fact, Opcity gathers online leads and connects clients with the right agents, with the help of effective proprietary data sets, applied analytics and machine learning.

Opcity’s customers consist of more than 5,000 brokerages and 40,000 agents in the United States, as well as a number of franchised brands such as Better Homes & Gardens, Keller Williams, ReMax, Century 21, Berkshire Hathaway Home Services, and leading independent brokerage companies.

Focus on Broadening Digital Offerings Bodes Well

News Corp, being a global digital property company, remains focused on enhancing its digital real-estate operations. Revenues in the Digital Real Estate Services segment rose 19% year over year in the fourth quarter of fiscal 2018 on the back of continued growth witnessed across REA Group (up 27%) and Move (up 11%). 

Notably, the company owns 61.6% stake in REA Group Ltd that is engaged in digital advertising business, primarily in real-estate services. REA Group spearheads one of Australia’s most visited residential property website, realestate.com.au.  REA Group, in turn, owns 20% stake in Move.

Further, in order to tap the burgeoning residential real-estate market in India, News Corp made a strategic move by investing in PropTiger.com. In a view to further enhance digital reach, the company acquired Checkout 51, the data-rich, digital and mobile coupon company. The company through its app allows consumers to browse weekly discount offers on a variety of grocery items.

Well, such acquisitions have lowered the company’s dependency on traditional advertising, thereby providing a steady revenue stream. Going forward, management expects to witness persistent revenue growth at REA Group and Move, which is likely to boost digital real-estate services’ performance and the company’s overall profitability.

Since News Corp’s acquisition of Move (in 2014), the latter has successfully doubled its revenues to $452 million in fiscal 2018. Further, Move generated real-estate sales growth of 20% along with total revenues that climbed 15% in the fiscal year ended Jun 30, 2018. We believe that the latest action of the company to invest in Opcity will add more laurels to the company’s growth in the digital spectrum.

Hurdles Yet to be Crossed

Although the digital space has been lucrative, the company is facing headwinds from declining print readership. Readers’ preference for accessing online content, mostly free, has made the industry’s print-advertising model increasingly irrelevant.  This weighed on the company’s stock, which has declined 11.2% in the past three months, underperforming the industry’s growth of 14.7%.

Nevertheless, we hope that the company’s dedicated endeavors to bolster digital offerings will help offset such hurdles in the long run, thereby helping it revive investors’ confidence in this Zacks Rank #3 (Hold) company.



 

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