News

Cirrus Media selling directories business HotFrog as revenues plummet

hotfrog screen shot logoBusiness 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.

cirrus media

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

ADVERTISEMENT

SUBSCRIBE

Sign up to our free daily update to get the latest in media and marketing