Automobile classified ad site Cars.com is reported to be out seeking a buyer at an asking price of around $3 billion. The site is owned by Classified Ventures, a consortium of newspaper publishers that includes the Gannett Co. Inc. (NYSE: GCI), A.H. Belo Corp. (NYSE: AHC), McClatchy Co. (NYSE: MNI), Graham Holdings Co. (NYSE: GHC) and the Tribune Co.
The consortium was created in 1997 with the idea of stemming the losses that were already hitting the newspaper industry hard as the World Wide Web showed signs of becoming the go-to marketplace for classified advertising, one of the main revenue sources for newspapers. Cars.com now attracts 11 million shoppers a month and pays a handsome dividend to its owners.
It is not exactly clear, reports The Wall Street Journal, who the buyer might be. One of the current consortium members may step up. Gannett, which owns 27% of Classified Ventures, is one possibility, but the company spent $2.2 billion last July to acquire TV station operator Belo Corp.
Privately held Cox Enterprises paid $1.8 billion for a 25% stake in a competing automobile classified ad site, Autotrader.com, in January. The Wall Street Journal notes that the deal brought private equity firm Providence Equity Partners a threefold return on its investment. That is why the Classified Venture owners are starting to beat the bushes for a buyer.
That and the fact that these publishers now depend less on newspapers for their revenue. We have already noted Gannett’s TV station buy, but Graham Holdings is the former owner of the Washington Post under a different name, and the Post is now owned by Jeff Bezos, CEO of Amazon.com Inc. (NASDAQ: AMZN). The Tribune Co. has also focused more on TV and is planning to split its print business into a separate company that will not include digital assets like Cars.com.
Some of the current owners of Cars.com may want to hold on to their current stake in it, which may make finding a buyer for just a majority position a bit trickier.