Sunday, January 27, 2008

PC: Lance Armstrong Takes “Significant” Stake in Demand Media; Launching Wellness Site Together




"Demand Media, the heavily capitalized Santa Monica-based online domain monetization and media company, has made an interesting turn: it has tied up with cycling legend and cancer survivor Lance Armstrong and his foundation, to launch a health-and-wellness site LiveStrong.com. As a result of this deal, Armstrong and his Lance Armstrong Foundation will take a “significant” equity stake in Demand Media, though the size of the stake was not disclosed. The site will launch in beta next quarter.
Demand Media has raised about $320 million from investors including Oak Investment Partners and Goldman Sachs, and according to WSJ was valued at $1 billion last year when the last investment round happened. The company has about $150 million in annual revenue and operates about 60 sites, besides its other domain activities.
“Live strong” is Armstrong’s personal mantra as a cancer survivor, and his foundation believes that launching a for-profit site would increase awareness about the foundation and promote its core mission of helping people with cancer. Demand Media will provide the technology and social media features and will keep the ad revenue generated by the commercial site; CEO Richard Rosenblatt said his company will reinvest much of it back into the livestrong property. The foundation also owns Livestrong.org, its main website, and users will be pushed to the commercial site to this non-profit site.
Of course they’ll be in tough competition with tons of other health and wellness websites, both from media companies, product companies in the space, as well as blogs focusing on various sub-sectors. "

4 comments:

admin said...

As mentioned, one component that Demand Media will assist the Livestrong foundation with is ad revenue on the proposed commercial site. The WSJ article curiously states that "The new site won't run tobacco ads." I'm glad that was clarified!

Arcanum said...

Interesting story but I find it hard to accept on face value.
For example:
1. Lance and LAF get a significant equity stake in Demand Media which was valued at $1 Billion last year. Say that stake was 5% that would be worth $50 Million.
2. A stubstantial portion of the ad revenue will be invested into Living strong, a non profit entity that Demand Media have no financial interest in.
So what's in this deal for Demand Media? Why would DM shareholders approve this deal unless there is something in it that DM has not publicised?????

Arcanum said...

Interesting story but I find it hard to accept on face value.
For example:
1. Lance and LAF get a significant equity stake in Demand Media which was valued at $1 Billion last year. Say that stake was 5% that would be worth $50 Million.
2. A stubstantial portion of the ad revenue which will be owned by DM will be re-invested into Living strong, the non profit entity which Demand Media have no financial interest in.
So what's in this deal for Demand Media? How do they recoup their $50Mil or make a profit if most of the ad revenue is donated to Living Strong? Why would DM shareholders approve this deal? There must be more to this than has been publicised to date?

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