Zip2 & CitySearch Merge p.11

By: Robert Neuwirth In a move that will give them a commanding hold over the online newspaper market, Zip2 and CitySearch, rivals that have led newspapers to create Internet city guides, will merge.
The new company, to be called CitySearch, will boast a network of 175 city guides, including 27 in the top 30 U.S. markets.
Both firms are involved with major newspapers and have financial backing from some of the nation's largest dailies. Knight Ridder, New York Times Co. and Hearst Corp. have direct investments in Zip2, while Times Mirror Co. and Washington Post Co. have bankrolled CitySearch.
"We have all that it takes to have newspapers make it on the Net," said Charles Conn, the CitySearch CEO who will be chairman of the new company. "As a bigger network, we can get in to work with our partners to sell national advertising and bring in all kinds of e-commerce products."
Added Elon Musk, co-founder and chairman of Zip2, who becomes vice chairman and head of product development for the new company, "We can provide what's necessary to compete with the Microsofts and AOLs of the world."
Both services help newspapers create online yellow pages directories and host Web pages. These strategies attract ad revenue and drive more commerce than traditional banner advertising. The two firms have led 200 newspaper, television and radio partners to sell almost 20,000 Web sites.
For instance,, which uses CitySearch, has sold more than 1,100 Web pages to advertisers.
The new firm will have to face an immediate problem with competition. For instance, Mercury Center, the online outpost of the San Jose Mercury News, competes with a CitySearch site developed for a San Francisco television station. A similar problem might evolve in New York, where Zip2 is about to unleash, a snazzy Web guide for the New York Times, while CitySearch works with Time Out New York, an entertainment weekly.
When the deal closes, expected in four to six weeks, the new firm will have 700 employees, and will be headquartered at Zip2's Mountain View, Calif., offices.
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