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Report: Google exploring sale of Zagat reviews

Might there be an Act 3 for the venerable restaurant guide?

Greg Sterling on January 3, 2018 at 6:25 pm

According to a report appearing in Reuters, Google’s parent Alphabet is considering a sale of reviews publication Zagat. The company was purchased in September, 2011 for a reported $151 million in the wake of a failed deal to acquire Yelp.

At the time Google needed local reviews content to better compete in local search with rivals such as Yelp, TripAdvisor and others. Marissa Mayer was responsible for the acquisition. Less than a year later Mayer became Yahoo’s CEO.

The Reuters report says, “Google has held informal talks in recent months with multiple companies about offloading Zagat . . . Any deal would likely involve the Zagat brand name and website . . .”

Whether the sale will actually happen and any potential purchase price are uncertain. If Zagat did sell it almost certainly would fetch less than what Google paid for it. Its brand has undoubtedly declined in value during the nearly seven years Google has owned and managed it.

Google clearly no longer needs Zagat, given that its own reviews content (across categories) has grown tremendously in the time since the acquisition took place. For example, Google now has more than 50 million Local Guides around the world writing reviews and creating content for Google Maps and local search.

The Zagat Survey, as it was originally called, was founded in 1979 by Tim and Nina Zagat. It was known for its distinctive series of mostly red, printed guides to local restaurants and hotels.

In terms of who would buy Zagat, here are some possibilities:

An established traditional publisher (magazine or newspaper)
An online competitor (e.g., TripAdvisor, OpenTable [now owned by Priceline])
Private equity (which had an ownership stake prior to the sale to Google)
Some private investor group that saw value in the brand and had a plan to expand it into additional categories
Wild cards: Yelp or another social media publisher

The main reason to buy Zagat would be to gain access to its content and brand, with the expectation that you could reinvigorate and grow it. One potential problem for any buyer is the business model. Prior to 2011, Zagat had a subscription model online (or you purchased the printed guides). It would be very difficult to go back to that in the present competitive environment.