RealTime IT News

Homestore Reports a Little Good News

Homestore is still trying to put its house back in order, and a few more bricks were put in place this week as the troubled online real estate play signed a content deal with Internet Broadcasting Systems that will give it exposure on TV station Web sites in 40 U.S. markets.

Westlake Village, Calif.-based Homestore , which saw several of its former execs plead guilty to fraud charges earlier this month, said it will be the exclusive real estate content provider for a variety of network television station Web sites operated by IBS in partnership with NBC; Hearst-Argyle Television; Post-Newsweek Stations, McGraw-Hill Broadcasting Group and Scripps.

IBS just this month signed a deal to operate the Web sites of NBC's 13 owned and operated TV stations. NBC retains ultimate editorial control, however.

On the home page of the various TV station sites, consumers will get a link to the "Real Estate channel," which features Realtor.com; HomeBuilder.com, and Homestore.com Apartments and Rentals as well as Homestore.com's mortgage and home affordability calculators.

Financial terms were not disclosed, but Homestore, battered by a scandal over inflated ad revenues, no doubt can use the money. Its stock is still trading at well less than $1 a share and for the first six months of the year, the company posted a loss of about $98 million on revenues of $140 million.

The company posted huge losses after overstating ad revenue for 2000 and for three quarters in 2001 and has been rebuilding and restructuring ever since.

Homestore's former chief operating officer, John Giesecke, and former chief financial officer, Joseph Shew, have pleaded guilty to federal criminal charges of conspiracy to commit securities fraud. Giesecke also pleaded guilty to wire fraud. Giesecke and Shew face up to five years in prison for the conspiracy charges.

U.S. Attorney General John Ashcroft has accused the company of puffing up its revenues through an illegal practice known as "round tripping."

In the round-trip transactions, money flowed out of Homestore through middlemen, then came back to the company disguised as revenue, prosecutors said. America Online reportedly is one of the companies being investigated in connection with its dealings with Homestore, although federal officials have declined to comment on such reports.

In August, AOL Time Warner said America Online may have improperly accounted for three advertising deals with revenue totaling $49 million. The other company or companies were not named, however.

Homestore appointed a new management team last January, charged with developing a turn-around plan.

TV station Web site deal is one of the fruits of that plan. "By partnering with IBS, Homestore is extending the local marketing reach of our customers," said CEO Mike Long, who replaced former Homestore boss Stuart Wolff. "We are giving real estate professionals a unique opportunity to market themselves and their properties locally through ... news channels in major markets ...."

The real estate channels powered by Homestore will be available at network television Web sites in Albuquerque, N.M.; Baltimore; Birmingham, Ala.; Boston; Chicago; Cincinnati; Dallas; Denver; Hartford, Conn.; Honolulu; Indianapolis; Jackson, Miss.; Los Angeles; Louisville, Ky.; Milwaukee; Minneapolis; New Orleans; New York; Oklahoma City; Omaha, Neb.; Orlando, Fla.; Philadelphia; Pittsburgh; and San Francisco, among other locations.