Local.com: Competing Against Groupon On The Cheap (LOCM, SPMD)

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If you have been a reader of 24/7 Wall St. for long, we have not exactly hid the fact that this “online coupon and daily deals” business is not very hard to compete against.  Does that mean that Groupon, Living Social, and a whole host of other “deals” sites cannot succeed?  Of course not.  What it does mean is that the world of coupons and daily deals is wide open and the only barriers to entry will boil down to who can get the message out the fastest and the cheapest.  Today came news that Local.com Corporation (NASDAQ: LOCM) is now going to live up to our own expectations that it will capitalize on this opportunity.

The news out this morning from Local.com is that the online business listing and directory service company is acquiring Screamin’ Media Group, a company which operates Screamin’ Daily Deals online.  The target is based in San Juan Capistrano, California and was founded in early 2010.  What is interesting is that it claims hundreds of thousands of subscribers and it offers deals from thousands of local merchants in 14 markets throughout the U.S.

Some of the markets that Screamin’ Daily services are Los Angeles, Orange County, Salt Lake City and San Diego; and the company also recently launched travel deals for its subscribers.  The company’s unaudited revenues in 2010 were listed as being roughly $2.4 million, yet the first half of 2011 has seen some $4.4 million in revenues.

What Local.com expects is to leverage its reach of over 20 million consumers each month through its flagship property plus a distribution network of over 1,400 regional media sites.  If it can pull this off, Local.com can become a force.  We have continually had this company as one emerging web property to watch because it fits right in that sweet spot of targeting the local search for businesses.  With the number of companies wanting to target local deals, local traffic, local search, and everything else local, it is Local.com which may be able to bridge that gap.  Today’s deal is only one growth opportunity that the company can undertake around the United States.

The acquisition is valued at $12.5 million in cash, stock and debt, but Screamin’ Media Group can receive up to an additional $20 million “if certain financial performance criteria are met during the two-year period following the closing.”

Local.com shares are currently up about 12% at $4.25 and the 52-week trading range is $3.17 to $7.55.  Before the effects of today, the market capitalization is listed as $90.6 million and its 2010 revenues were $84.1 million.

As far as another company which can likely accomplish some of the same… a $59 million valued company called SuperMedia Inc. (NASDAQ: SPMD), which prints Yellow Pages and which has SuperPages.com.

JON C. OGG