Help-wanted ads: A monster of a fight

Analysts say it's probably too late to stop the attrition of help-wanted ad revenues to the publishers' Internet rival, TMP Worldwide, the owner of Monster.com.

In June, TMP Worldwide signed a deal to buy Monster.com's biggest competitor, HotJobs.com. If that deal is approved, it would combine the leader and second-runner in Internet job sites, respectively. TMP also offered to acquire European service Jobline International in May.

Tribune and Knight Ridder have tried to compete with their CareerBuilder business, which was in fourth place in terms of revenue, just behind HeadHunter's $34 million. Friday, the publishers announced they would chip in $100 million apiece to buy HeadHunter for around $9.25 a share in cash.

The companies were explicit in their reasons for buying HeadHunter: "The CareerBuilder-HeadHunter combination creates a formidable force that is positioned to close the gap on Monster," said CareerBuilder CEO Rob McGovern.

But analysts say newspapers aren't likely to catch up with "the monster."

"It starts to make the newspapers look a little more organized," said Salomon Smith Barney analyst Lanny Baker, who covers TMP Worldwide. But there is "a brand affinity for 'the monster'" that they can't match, he added.

"Monster has been working away the newspapers' bread and butter for four years now," Baker said of the site, which has been operating for six years. And it will be even tougher to beat Monster.com--which was the No. 1 site in terms of market share, with $272 in revenue for the first half of this year--now that it has combined with HotJobs, which had $65 million in revenue in that same time.

Shredding the papers
In the past four years, newspapers have gone from having 100 percent of the classifieds pie to 88 percent. Though that means Internet companies still have only 12 percent of the market, the figure is expected to grow to 20 percent in the next couple of years, according to Baker.

That's having a tremendous effect on one of the newspapers' main revenue sources. In Knight Ridder's most recent third-quarter report, the company said classified ad revenue fell 14 percent in July as double-digit declines in help-wanted adds offset increases from real estate and auto listings.

"Classifieds remain the weakest category on steep help wanted declines," Goldman Sachs analyst Michael Beebe wrote in a research note.

And for newspaper companies that don't have the online assets that Knight Ridder and Tribune have, the squeeze is about to get even tighter.

A representative for Gannett said the company's USA Today Careers Network is its prime effort to stop losses from its help-wanted classifieds. She added that while revenue from employment ads was down 21 percent year over year in July, revenue has only recently declined.

The New York Times reported that July ad revenue was down 11 percent, with help-wanted ads suffering steep declines. It didn't return calls for comment.

Baker said brand affinity for Internet sites like Monster.com make it unlikely that newspaper companies will be able to keep up with online companies by forming their own Web sites. Their one hope was acquisitions. But there isn't much left to acquire.

Only a handful of players are left, including Dice.com and Techies.com, which specialize in tech jobs, and Boardroom.com.