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Deutsche Bank: Online Real Estate Cold War Goes Hot

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In a recent note, analysts at Deutsche Bank provided an update on the online real estate war between Zillow Group Inc (NASDAQ: Z) and News Corp (NASDAQ: NWS). The two entities are butting heads over News Corp’s ListHub and Zillow’s recently-acquired Trulia.

What’s All The Drama About?

Following Zillow’s acquisition of Trulia, ListHub recently announced that it will no longer be providing listing information to Trulia. This decision includes the termination of an agreement the two companies had that was previously in place through June of 2016. In response to the threat, Trulia announced they are filing a restraining order to prevent ListHub’s listings from being withdrawn.

Does Zillow Need ListHub’s Listings?

Zillow’s listing agreement with ListHub will expire in April. According to Zillow, the company will only lose “a couple hundred thousand” listings out of more than 3.6 million when its contract with ListHub expires. However, Deutsche Bank analysts believe that Trulia could lose 40 percent of its listings if the restraining order against ListHub fails.

Further Complications For Zillow

With Trulia on the verge of possibly losing 40 percent of its listings, Zillow is scrambling to renegotiate Trulia’s post-acquisition listing agreements. Deutsche Bank analysts see this transitional period as a time of weakness for Zillow, and they predict that News Corp could take advantage of the opportunity. “While Zillow renegotiates, News Corp may go on the attack marketing its data supremacy,” analysts explained in the report.

Zillow’s Lawsuit Appears Weak

For now, Zillow’s hopes hinge on the lawsuit it has filed against ListHub to keep Trulia’s original contract in place through June 2016. Zillow argues that the acquisition of Trulia was not technically a “change of control,” but Deutsche Bank analysts aren’t buying it. “We struggle to see how the deal was not a change of control,” the report concludes.

Latest Ratings for Z

May 2018Bank of AmericaMaintainsBuyBuy
Mar 2018KeyBancMaintainsOverweightOverweight
Mar 2018Morgan StanleyMaintainsOverweightOverweight

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Posted-In: Deutshe BankAnalyst Color Analyst Ratings Real Estate


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