• by Gavin O'Malley  @mp_gavin, June 8, 2005

Media company E. W. Scripps said this week that it plans to acquire comparison shopping site Shopzilla for $525 million. Scripps plans to offer Shopzilla greater access to capital--$35 million in initial working capital--as well as brand-building know-how, company representatives said. The move came days after eBay said it intended to buy Shopzilla rival Shopping.com for $620 million.

As paid search and online advertising continue to heat up, better-established Internet and media companies have begun swallowing smaller companies in an effort to bolster Web traffic and ad revenue.

The privately held Shopzilla, which searches about 55,000 retailers for more than 30 million products, earns money from retailer referral fees as well as from search services it provides for sites including Time Warner's Road Runner and AOL. Established nine years ago, the company said it became profitable in 2002.

Scripps officials said that Shopzilla's current management will run the site as a stand-alone unit of Scripps. Shopzilla also owns BizRate, a consumer feedback site that provides shop and product reviews.

E. W. Scripps, which owns the cable TV channels Home & Garden Television and the Food Network as well as 21 newspapers and broadcast television stations, said Shopzilla attracted 14 million visitors a month, and expected to earn $30 million to $44 million in 2005.

The companies said they expected the deal to close early in the third quarter. E. W. Scripps will pay cash, and Shopzilla's shareholders will receive the company's net working capital, estimated to be about $35 million.

In 2004, Scripps posted net income of $304 million on revenue of $2.2 billion. The transaction is expected to be completed in the third quarter of the year.