Scripps-uSwitch Deal Raises Analyst’s Concerns

Merrill Lynch analyst Lauren Rich Fine expressed concerns about Scripps’ $366 million acquisition of uSwitch in a client note today despite growth-rate projections that look good: “We liked Shopzilla as we were comfortable with the relatively short payback period, which is a requisite when approaching the rapidly evolving Internet, but believe given the rich price paid the payback could be longer for uSwitch. … SSP already owns Shopzilla, one of the leading comparison shopping sites in the US and, to date, has enjoyed tremendous financial success top and bottom line as well as solid traffic trends. We would have expected them to leverage this technology geographically or to other areas of comparison shopping rather than make a hefty acquisition to enter a new area of comparison shopping. The business model is different as revenues are generated by commissions from service providers to whom uSwitch delivers new customers.”

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