News Corp CEO Robert Thomson on CoStar and Domain: "We Have The Advantage"

News Corp CEO Robert Thomson says the media giant will have a competitive advantage if CoStar Group completes its acquisition of Domain in Australia.

News Corp is a major shareholder of REA Group, which owns realestate.com.au—a historically dominant market leader that CoStar believes it can threaten and even overtake, assuming it succeeds in taking control of perennial number two, Domain.

CoStar submitted a $1.7 billion bid for Domain last month as it looks to expand its global footprint of residential real estate marketplaces.

But Thomson believes CoStar is underestimating REA's ability to retain its market leadership position thanks to its media empire, which boasts globally recognised names like News.com.au, The Wall Street Journal and Fox News.

Thomson said:

"We have the comparative advantage in these competitive markets of having media properties. And in the world when search is fundamentally changing because of [artificial intelligence] … your ability to create a ‘network effect’ with your own sites—to be able to drive traffic to Realtor.com from MarketWatch, be able to drive traffic to REA in Australia from news.com.au—that’s a huge advantage.

"Not only in a commercial sense, but in an editorial sense, you’re able to move traffic around. Andy Florance is a great competitor himself. You can certainly spend a lot of money on marketing, but what we can do, really without spending money, is networking."

Nevertheless, Domain has its advantages, namely strong relationships with media outlets The Sydney Morning Herald, The Age, and The Australian Financial Review.

CoStar could leverage heavy marketing spend across all these publications to force realestate.com.au to increase its marketing spend and retain market share—but there is a lot of ground to make up.