Scripps: Old-School Media, New Moves

This column was originally published on RealMoney on Jan. 11 at 11:18 a.m. EST. It's being republished as a bonus for TheStreet.com readers. E.W. Scripps(SSP Quote) has made all the right moves in its transition from old-school media (newspapers, magazines, cable) to new media.

Last week John Janedis of Bank of America upgraded E.W. Scripps to buy, citing "SSP's online strategy, which should help drive longer-term earnings growth relative to its peers." I agree with John, and that is why I recommended SSP as a buy back in October at $46.34 (in the Internet Review). I remain bullish on SSP and will take you through my reasons.

First of all, rather than paying $100 billion for a struggling dial-up ISP, the company paid $525 million for Shopzilla, a comparison-shopping engine. The word "comparison" alone implies there will be synergies for Scripps across all of its properties, as online comparison shopping is quickly taking the lead as the primary source of retail information for both online and offline shoppers.

I believe Shopzilla will play a key role in providing upside for Scripps' stock. The company bought Shopzilla at 16 times 2005 EBITDA, in comparison with other recent deals such as Shopping.com for 21 times 2005 EBITDA. On the basis of BofA's estimates, Shopzilla is growing revenue by over 100% over the past three quarters vs. about 30% for Shopping.com (owned by eBay (EBAY Quote)). ...