Cirrus Media selling directories business HotFrog as revenues plummet
Business to business publisher Cirrus Media is selling off its small and medium enterprise directories business HotFrog as revenues from the once multi-million dollar division continue to tumble.
It is understood the publisher is close to a deal, although venture capital outfit Catalyst which owns Cirrus Media declined to say if any deals had yet been done on the sale, however Mumbrella understands that no sale has yet occurred.
Speculation puts the local arm of SEO specialists Bruce Clay in the frame to buy the directory, which claims to have listings for 56 million businesses across 32 countries, with the majority of those overseas companies.
A sales prospectus circulated to potential buyers shows the division, which once had over 200 employees and turned over $750,000 per week in its heyday, now has nine full time equivalent staff, understood to be technical and support staff, and is forecast to have an EBITDA – earnings before interest, tax, depreciation and amortisation – of $740,000 this year, down from $1m for financial year 2014.
Its revenues are predicted to fall from $4m last year to $2m this. The deadline for the sale had originally been set for early February, although this has now been pushed back.
The prospectus says the company gets “the majority” of its revenue from Google Adsense adverts, however tweaks to the Google algorithms in 2011 and 2012 saw its profitability plummet.
It is the latest part of Cirrus to be sold off since John King took over from longtime CEO Jeremy Knibbs in August. Whilst Knibbs opted to keep together the assets of the business, which was called Reed Business Information before a buyout by private equity firm Catalyst in 2012, King has already sold off media and travel titles B&T and Travel Weekly to their publishers whilst the Lawyers Weekly title was sold off to to Sterling Media.
Despite these divestments Mumbrella understands there is no broader plan to break up and sell off the remaining assets at this time.
The future of the Hotfrog business remains unclear, with speculation it could be run down with the buyer shedding staffing and keeping overheads to a minimum to make money from the long-tail search listings.
Robert Burton-Bradley
From 200 staff to 9 – not many more staff can be shredded surely…
Google makes smart search engine changes all the time – the key issue is that Reed rode a wave, and did not de-risk the reliance on Ad sense.
Plenty of egg circualting – however, Catalyst picked it up for little cost, and Reed Elsevier share price rose on the day RBIA was sold – a win win for the suits.
In the right hands and with the appropriate investments in parts of hotfrog (the 85% that is overseas) it could make a comeback – maybe not to the lofty days of the past – but it could for sure get to 250k per week……
Would love to hear what the founder Andrew Dent has to say on his demise…
(Edited under Mumbrella’s comment moderation policy)
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Came across this annoucement from B&T made by former CEO in July 2014
“Although there is much to do you yet, the business is starting to pick up momentum in some key areas, including the directories and events groups, and most especially in content marketing, which now has a fantastic team leading it. This is an area where there is significant opportunity across the group.”
Hmmm, how the world can change in a short time….B&T gone, Travel Group Gone, other titles on the chopping block, staff lay-off’s, and head of events group gone and I believe head of content marketing gone….
Wow!, the Pigeons are running amok ….
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“founder Andrew Dent has to say on his demise…”….
Couple of Typo’s – Dent was Co-Founder and not “the founder” and you are looking for a statement from the Co-Founder on the demise of Hotfrog and not the demise of Dent…
I heard Dent moved out of online publishing and moved into crowd funding concepts .
However, apparently Dent was seen last week outside the CirrusMedia offices talking to CEO…
Maybe the frog will come back to life as a pigeon http://www.hotfrog-pigeon.co.county
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Any prospective buyer would surely be concious of Google’s mobile algo focus.
I can’t see any ticks for Cirrus sites on Google’s testing tool. I wonder if that will result in further traffic declines?
https://www.google.com/webmasters/tools/mobile-friendly
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