The National Association of Realtors is giving its blessing to plans by publishing giant News Corp to acquire realtor.com operator Move Inc. because of the potential “multiplier effect” for realtor.com if owned by the “world’s pre-eminent media, publishing and digital real estate businesses.”
Under the terms of a 1996 realtor.com operating agreement between Move and NAR, NAR has the right to sever ties with Move in the event of a “change in control,” or if it was not represented in Move’s board of directors. If NAR terminates the agreement, the acquisition will not go forward, according to language built into the terms of the deal.
Instead of standing in the way of the deal, NAR will tender its own shares in Move, and give up its seat on Move’s board of directors. As of March 31, NAR held 1.92 percent of Move’s common stock and its only share of Series A preferred stock, according to a regulatory filing.
Move will continue to have “the exclusive and perpetual right to operate realtor.com,” News Corp Chief Executive Robert Thomson said in a conference call with investors.
NAR never considered standing in the way of the deal because the upside was “so phenomenal” for members, according to Bob Goldberg, president and CEO of the NAR subsidiary that oversees the agreement, Realtors Information Network (RIN).
“If we had not approved the acquisition, we’d still be working with Move anyway, so it wasn’t an issue of NAR taking [realtor.com] back,” he said.
“We need the thrust of a strong media player that can bring far more to the table than we’ve experienced before.”
The acquisition, Goldberg said, is a “huge win” for members because it will bring them and their homebuyer and seller clients more exposure to consumers visiting News Corp’s digital and print platforms, which include a variety of newspapers in the U.S., the United Kingdom and Australia.
In a memo to colleagues, Thomson said News Corp brings real estate experience gained through its 61.6 percent ownership stake in the REA Group, operator of Australian search portal realestate.com.au, and newspapers including The Wall Street Journal, which operates its own real estate portal, “Mansion.”
REA plans to become a 20 percent stakeholder in Move and “will be an important and extremely able partner as we rapidly build Move’s future,” Thomson said.
Move “has much going for it — its websites, including the popular realtor.com, convert more leads into sales than any other digital property business,” he said, adding that Move also benefits from its “significant ties” to NAR.
On this morning’s investor call, Thomson said NAR and its members were an important part of the real estate ecosystem.
“We see tangible and enduring value in the role of Realtors, who are pivotal in navigating the sale and the acquisition of real estate, whether it be in arranging inspections or in providing background intelligence that is essential for market participants,” he said.
“And we see a growing role for Move in the market. It has the right assets, the right relationships and, soon, the right platform to project it into the future.”
In contrast to Zillow’s proposed acquisition of Trulia, which Goldberg called “an additive play,” merging with News Corp will have a “multiplier effect” for realtor.com, Goldberg said.
“They’ll have eyeballs coming from many more new sources that were never available to us before,” he said.
In an FAQ to members, NAR drew a further comparison. “This is not a case of two online real estate sites merging. This is a robust, experienced digital real estate business with a long-standing and powerful connection with the million-plus member National Association of Realtors joining forces with one of the world’s pre-eminent media, publishing and digital real estate businesses.”
Goldberg declined to disclose any details about what kind of opportunities will be available to members on News Corp’s platforms, though he mentioned search widgets and advertising as possibilities. He also declined to disclose upcoming changes to the realtor.com site after the deal closes, citing competitive reasons.
As part of the deal, all members of Move’s eight-member board of directors have agreed to resign, including NAR’s current board representative Catherine Whatley. NAR will instead have two seats on the company’s nine-member advisory board.
“It will be a different type of approach because it’s advisory in nature, but items and issues that impact realtor.com will certainly be worked through and discussed with that advisory board,” Goldberg said.
The realtor.com operating agreement will be modified “a little bit” as a result of the deal, he said, but declined to disclose those changes. Still, he said the changes made to the agreement last year were more “substantial” and gave Move and realtor.com more flexibility to be more competitive, which helped make Move “more attractive” to companies like News Corp.
NAR and Realtors will still have a say in how realtor.com is run, Goldberg said, with its seats on the advisory board. RIN staff will also stay in place to take member feedback and work collaboratively with the operator. The operating agreement also continues to require NAR approval in regards to advertising changes.
“NAR and RIN are both extremely excited about what this can do on behalf of our members. We would never have gone down a path of supporting a major play like this unless we knew it had great potential for members and consumers,” Goldberg said.
In its FAQ, NAR outlined how News Corp intends to support Realtors on realtor.com:
- Listings received under a data content provider agreement will not be modified without permission of the broker or agent, as applicable.
- Consistent with past practice and subject to the broker’s or agent’s instructions, updating listings regularly to ensure that they are timely and accurate.
- Consistent with past practice and subject to the broker’s or agent’s instructions, respecting copyright notices and utilizing anti-scraping technologies and processes as reasonably appropriate.
- Except as otherwise permitted in the Operating Agreement, only displaying properties that are listed with the assistance of a licensed real estate broker or salesperson and not properties offered for sale directly by owner.
- Respecting Realtors livelihood by not interfering with their referral or commission structure and not attempting to disintermediate Realtors with the real estate transaction.