• by Erik Sass  @eriksass1, August 2, 2006

Three of the nation's largest newspaper holding groups--Gannett, McClatchy, and the Tribune Co.--announced late Tuesday that they were transferring some of their stakes in a major online job classifieds network, CareerBuilder.com, as well as ShopLocal.com and Topix.net.

Gannett and Tribune will now both own 42.5 percent of CareerBuilder.com and 31.9 percent of Topix.net, with McClatchy receiving $310 million for the part of its stakes transferred to the first two companies. McClatchy will retain a 15 percent stake in CareerBuilder.com.

Overall, the deal--which values CareerBuilder.com at about $1.5 billion--is an important strategic move by Gannett and Tribune to strengthen their online classifieds presence at a time when such national networks are vital to newspapers' success. The move is particularly important for Tribune, as part of its board battles a group of dissident shareholders over the company's future direction.

According to Ken Doctor, a newspaper analyst with Outsell, Inc., these kinds of classified alliances will make or break major newspapers as they navigate the difficult transition to online publication. For one thing, partnership with an online classified service "gives you distribution--which is important, since we all live in this kind of hybrid global-local world," says Doctor, noting that Americans' propensity to move long distances and change jobs requires both geographic breadth and local connections.

"They move a lot country to country, state to state, so it's crucial to get a bigger distribution--both of people who are placing ads and people who looking for them," Doctor explains. In this context, "Obviously the Internet is wonderful for the three major classified areas: job placement, real estate, and auto."

Meanwhile, a recent Deutsche Bank study notes that the survival of newspapers relies on both affiliating in networks and forming an online classifieds presence--either by creating one or allying with an existing player. The report, "Class System in Classifieds," states that newspapers that are part of the CareerBuilder network held on to an average about 57 percent of their online classified markets, versus 41 percent for those which remain unaffiliated.

Similarly, the four companies that own Cars.com network boasted much higher shares of the online classified market for automobiles than those which remain unaffiliated, with the Washington Post and Gannett holding 74 percent share each, the Tribune company 69 percent, and Belo 64 percent.