By: E&P Staff
The McClatchy Co. said Tuesday that it sold its 15% stake in ShopLocal, the local shopping Web site, to Gannett Co. for $7.875 million, which it used to pay down debt.
As recently as March, McClatchy’s stake in the business had been valued at $11.13 million.
As previously reported, Gannett has bought out, in separate transactions, all of ShopLocal from McClatchy and Tribune Co. Gannett and Tribune had both held a 42.5%.
McClatchy acquired a 33% stake in ShopLocal when it acquired Knight Ridder Inc. in June 2006. Two months later, it sold 18.3% to Gannett and Tribune, under terms of a change in ownership contract.
“Given our small ownership interest in ShopLocal and the ability to realize the benefit of a tax loss, it made sense to monetize our interest,” McClatchy CFO Pat Talamantes said in a statement.
“As a result of the sale, we will reduce the carrying value of ShopLocal to the sales price and will record a charge of approximately $3 million in our second quarter results,” he added. “The proceeds from the sale were used to reduce debt immediately and the tax benefit is expected to result in cash tax savings of approximately $5.6 million in the fourth quarter of 2008.”
McClatchy newspapers will continue to participate in ShopLocal, which essentially offers newspaper retail ad coupons online.
Gannett said it would combine ShopLocal to work in conjunction with its PointRoll business “to create ads that dynamically connect retail advertisers and consumers, online and in the store.”
Gannett, Tribune, and McClatchy remain partners in a number of ventures, including CareerBuilder, Classified Ventures and Topix.net. Tribune and Gannett also jointly own Metromix, a national network of local entertainment Web sites, and are partners in quadrantOne, an online advertising venture.