Real estate firm, Meredith to use magazine name in new franchise

Des Moines-based Meredith Corp. is getting back into the real estate business.The publishing and broadcasting company has completed a long-term agreement with real estate company Realogy Corp. to use the Better Homes and Gardens brand name in a new real estate franchise.

Realogy, based in Parsippany, N.J., owns other real estate companies, including Century 21, Coldwell Banker, ERA and Sotheby's International Realty.

Terms of the deal were not disclosed, but Meredith said it would receive ongoing royalty payments from Realogy based on sales from Better Homes and Gardens Real Estate.

Better Homes and Gardens Real Estate will be launched on July 1, 2008, the company said. Under the deal, Realogy will develop local franchises across the United States with the Better Homes and Gardens brand.

The deal "fits extremely well with our strategic objective to further diversify our business by providing Meredith with significant sources of revenue beyond traditional advertising," said Meredith Chief Executive Steve Lacy.

Meredith formerly operated Better Homes and Gardens Real Estate Service with about 800 franchise offices from 1978 to 1998 when it sold the business to GMAC Home Services. GMAC had a 10-year brand licensing agreement with Meredith for the Better Homes and Gardens name, which expires next year. GMAC rebranded the business shortly after it bought the division, dropping the Better Homes designation, he said.

When Meredith operated the real estate business, it was a small player in a "rapidly consolidating business," Lacy said. "It wasn't our core business and we were not allocating resources to it like Realogy will."

The new venture will take a few years to develop, "but down the road it will likely be the size (in terms of operating profit) of one of our medium magazines," Lacy said.

Meredith has aggressively sought licensing partners for its Better Homes and Gardens brand.

There are books, home decor, wine club, gardening tools, outdoor products, fabrics, and most recently a line of furniture that all carry the Better Homes name.

Extending the brand name is an excellent idea, especially in light of the downturn in print media, said Robert Passikoff, president of Brand Keys, a New York-based market research firm that focuses on brand power and customer loyalty.

"Meredith has always been careful about the care and feeding of its brand," Passikoff said.

The real estate market, while on a downslide now, will recover, he said.

"The Better Homes and Garden brand will bring some value in the buying and selling process," he said.

Meredith will benefit in other ways from the Realogy agreement, including increased exposure for the Better Homes and Gardens brand, increased subscriptions to Better Homes and Gardens magazine from marketing efforts through the real estate franchises, and increased advertising in the magazines from Realogy brands, Lacy said.

Realogy has about 15,000 workers worldwide.

One in four homes sold is a Realogy company transaction, Lacy said.

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