Big news in portals this week, when REA Group – the owner of realestate.com.au, the ‘Rightmove of Australia’ – was forced to confirm rumours that it was considering acquiring the 'Rightmove of the UK', Rightmove. It now has until the end of September to launch a formal bid.
Whether it decides to do so, it got a whole lot more expensive directly after the announcement. From being worth £4.4Bn before the news, at one point Rightmove was worth a staggering 27% more in less than a day – nearly £1.2Bn added as lip-licking shareholders dived in, seeing the deal as almost a fait accompli. It certainly looks like News Corp, the Murdoch-owned backers of REA, are serious.
It's interesting to consider what REA thinks it will be getting for its £6Bn+ (surely the minimum it’s going to have to now pay). With RM’s 2023 profits at around £260m it would take 24 years to make that investment back. I think we can all agree that they are not going to wait this long.
So, how to get there faster? Well, Rightmove’s recent ruthless raising of agent subs could come to be looked back upon fondly, as a relatively peaceful time when only a few agents went to the wall trying to afford them. REA in Oz has mechanisms for charging per property, as well as some even more creative ways to part agents (and vendors) from their hard-earned.
There will be much talk of investment, of providing homesellers and landlords with 'what they really need' whilst also reinforcing the Rightmove brand as the only place you need to go to find your next home. And this may remain true, assuming that 90%+ of agents continue to advertise on that site.
What of the alternatives? Well, CoStar’s acquisition of OnTheMarket now looks really cheap at £100m – but it’s about to see an even steeper climb to topple the market leader. CoStar’s aggressive CEO, Andy Florance, must be looking at the chips on his side of the table and mulling a bid too – assuming that they haven’t already committed a sizeable chunk to acquiring Zoopla already.
Zoopla’s in even more bother and its owners, Silver Lake, might consider cashing in now as there is likely to be a premium on its value between now and the end of the month, when we discover whether REA will actually make a bid or not. It will be interesting to see whether they can leverage this news to their advantage too.
What this is not good for is the agent ‘customer’. REA Group will not acquire Rightmove if it believes that there is any chance that the revenues and profits are going to drop. Similarly, should Rightmove decide to fight off any takeover, they are going to have to convince current shareholders that sticking with the current status quo is better than twisting to see what REA Group could do. That will involve a lot of chest-thumping about raising subscription prices to even more eye-watering levels.
There are going to be a lot of conversations going on between powerful, rich interest groups going on way above the average agent’s heads. Even the likes of Connells Group will only be spectators, as an entity they helped make one of the most powerful ever in the industry is horse-traded amongst those that see them (and each of their competitors) as mug punters that can’t leave the casino.
As this seismic struggle commences in earnest over the next few days and weeks, the advice for agents remains the same – spread the risk, find and support alternatives like Jitty (free) and OnTheMarket (negotiable right now, I’d imagine) to make a break with Rightmove at least theoretically possible.
Make no mistake – if you thought that Rightmove’s dominance was a problem before, it’s about to become a hell of a lot worse. Whoever ends up owning this portal into 2025, they will be ruthlessly rinsing it for every pound they can. And that means gouging even more from agents.
You need options. Go find them. Right now.
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