Newspaper publishers Knight-Ridder and Tribune Co. will acquire online job recruitment site Headhunter.NET for about $200 million. The acquisition will strengthen the two companies' jointly operated CareerBuilder site. Although top dog Monster.com will likely not lose its leadership position anytime soon, CareerBuilder has advantages that will allow it to compete well.

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By Rex Moore (TMF Orangeblood)
August 24, 2001

Two of the nation's largest newspaper publishers, Knight-Ridder (NYSE: KRI) and Tribune Company (NYSE: TRB), are putting up $100 million each to buy online job recruitment site Headhunter.NET (Nasdaq: HHNT). The combination is not likely to slay Monster.com, the clear leader in the online job market, but it should prove beneficial for the companies involved.

The two publishers operate dozens of newspapers in major markets across the U.S. They jointly operate another online recruitment site, CareerBuilder, which draws more than 4 million unique visitors a month. Headhunter.NET sees about 2.5 million monthly.

Management has grand plans for CareerBuilder, hoping the combination of traditional media and the Internet will produce a dominant brand in the job services market. Knight-Ridder CEO Tony Ridder hopes that no matter where a jobseeker might be, whether "at a desk, on a train, outside eating lunch, he has access to CareerBuilder, and CareerBuilder is the service he thinks of first. Our goal is to build a brand that is synonymous with building one's career."

But there is a true beast standing in their way. Monster.com, owned and operated by TMP Worldwide (Nasdaq: TMPW), will only strengthen its leadership position when it swallows up HotJobs.com (Nasdaq: HOTJ), the second-largest player in the online employment services space. Monster.com is benefiting from a network effect, whereby most jobseekers will be drawn to the leading site because that's where most of the employers are, and vice versa.

Luckily for CareerBuilder, however, this is not a winner-take-all game. Although Monster.com may remain the leader, people can still search for jobs and post resumes on more than one site. Other players can survive, and even thrive, and CareerBuilder has promise -- particularly if the companies can create useful partnerships with their offline media products, the likes of which TMP does not own.

Knight-Ridder and Tribune will begin branding all of the jobs sections of their newspapers with the CareerBuilder name. The new section will debut Sunday, September 30, in such papers as The Chicago Tribune, Los Angeles Times, Philadelphia Inquirer, and The Miami Herald.

That is powerful advertising and marketing of a scope Monster.com can't match. Couple that with the ability to offer both online and offline packages, and CareerBuilder looks like a formidable player.

Rex Moore reminds you that the white zone is for immediate loading and unloading of passengers only -- there is no parking in the red zone. At the time of publication, he owned no companies mentioned in this article. His holdings and the Fool's disclosure policy may be viewed online.

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