Gannett Buys ReachLocal for $156M to Boost Digital Marketing Services
June 27, 2016 | Contributed by: Greg Sterling
Earlier this afternoon it was announced that newspaper publisher Gannett has acquired digital marketing firm ReachLocal for $156 million. It makes sense for Gannett as the company moves more aggressively to grow digital ad revenue:
Initially, ReachLocal will expand Gannett’s digital revenue by roughly 50% with its more than 16,000 customers in markets throughout North America, Latin America, Europe and Asia/Pacific. At the conclusion of Gannett’s current digital services arrangement in its existing markets in mid-2017, the combined organization will benefit from leveraging ReachLocal’s best-in-class digital marketing services products in Gannett’s existing 107 local markets in the U.S. ReachLocal brings a diversified client base with home services, healthcare, automotive and professional services representing its largest vertical markets.
ReachLocal was founded in roughly 2004 and went public in 2010. It has a current market cap of just under $50 million. In Q1 the company reported revenues of $79 million, which was down year over year. It currently has just over 16,000 local business customers.
The deal has been approved by both boards and is expected to close in the third quarter.
It’s not clear whether the ReachLocal brand will survive in the long term or whether Gannett will rebrand the unit as something like “Gannett digital marketing services.” Gannett had a digital services division, which was spun out of the company last year as Tegna.
ReachLocal is a member of the LSA. Its CEO, Sharon Rowlands, sits on the LSA board.