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Opinion, commentary and analysis on everything that makes the U.S. housing economy tick -- not to mention the ghosts in the machine, too. Written by HW's team of editors and reporters each business day.
Lending

Monday Morning Cup of Coffee: Zillow CEO said what about Move/News Corp?

Also, Americans paying less at the pump

February 15, 2016
KEYWORDS FDIC Move Zillow

Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on bigger issues.

The shots between Zillow and Move, which is now owned by News Corp, continue following recent news that came out in Zillow Group’s earning on the how much this is financially hurting the company.

According to Zillow’s latest 2015 financial results, a large portion of 2015’s net loss was driven by the legal expenses associated with Zillow’s battle with Move over claims of allegations of trade secret theft involving Errol Samuelson, who was once Move's chief strategy officer. And Zillow said those costs may rise in 2016.

The net loss of $91.1 million in 2015 was a larger net loss than Zillow Group saw on a pro forma basis in 2014, when Zillow saw a pro forma net loss of $83.3 million.

The day after Zillow Group reported its earnings, Zillow CEO Spencer Rascoff was interviewed on CNBC to explain the results of the company's latest quarter.

In response to a question on the company’s legal expenses, Rascoff said,” We are focused on innovating. NewsCorp is focused on litigating.”

“Companies that lose on the business battlefield resort to the courtroom out of desperations,” said Rascoff.  

Check out the full interview here.

A comment that Move did not take likely.

Move issued the following statement in response:
Today on CNBC, Zillow CEO Spencer Rascoff accused Rupert Murdoch and News Corp of acting out of ‘desperation’ in filing a ‘vindictive’ lawsuit.  But ​that litigation​ was filed by Move long before News Corp even owned the company, and it is based squarely on the merits of the case, not emotions.  In Zillow’s own filings with the SEC, it has concluded there is a ‘reasonable possibility’ it will suffer a loss in this lawsuit.

It’s understandable why Rascoff said today of the litigation, he's ‘tried to put it out of my mind.’ Just last week, the judge ordered defendants to appear for a two-day evidentiary hearing on April 13 and 14 into Move’s claims that important evidence has been destroyed by some or all of the defendants in this case.

According to Zillow’s earning results, the legal battle is still ongoing, with Zillow stating that it spent $8.1 million in legal fees related to the Move/News Corp lawsuit in the fourth quarter, and $27.1 million for all of 2015, with those fees dragging down Zillow’s total financial results.

Americans still are shocked by prices at the pump, with spending on gasoline showing dramatic swings both up and down since June 2014.

The most recent Gallup report found that in September, 35% of Americans said they were spending more on gas, compared with 58% one year earlier.

However, it noted that at the end of 2015, that number went back down to 21%, exactly where it was nine months earlier.

“It is likely that this swing reflects the reduced demand brought on by the end of the summer driving season, the global oil glut and reduced prices at the pump,” the report said.

As far as how the oil drop will impact housing, check out this chart from the Mortgage Bankers Association, which examines the 2015 trend in employment in several states reliant on oil production.

Flagstar Bancorp announced that it launched a national homebuilder lending platform in order to support the expansion of the company's commercial lending business.

To support the launch, Flagstar named Joe Hardy, formerly of Texas Capital Bank, managing director of the unit. He will report directly to Andrew Ottaway, executive vice president and managing director of Lending.

Also joining Flagstar from Texas Capital is John Brimberry, who serves as manager of Sales and Operations.

"We are pleased with the quality and caliber of talent we continue to attract at Flagstar," said Alessandro DiNello, president and CEO of Flagstar.

"Following the appointment of Drew Ottaway in November, we have continued to make progress executing on our strategic initiatives to position Flagstar for growth while diversifying our businesses. The addition of Joe Hardy and his team will strengthen our commercial lending capabilities and continue our efforts to diversify and grow our revenue streams," said DiNello.

President’s Day is tomorrow, and while it is a federal holiday, not everyone gets to bask in the joy of a day off. Whether you get the day off or not, let’s not forget about this hysterical gem from Central National Bank on the holiday. 

And once again, the Federal Deposit Insurance Corp did not close any banks.

 

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