Demand Media Says It Wants to Split in Two — Spinning Off Domain Registrar Business From Media Unit
Demand Media said today that it planned to split its company in two parts, spinning off its domain registrar business from its media one in a bid to better clarify the company to investors.
Since it went public several years ago, there has been some level of difficulty for each part of the Santa Monica, Calif.-based Demand to easily explain itself to Wall Street, given the very different natures of its key — but very different — revenue units.
In a statement, Demand said that it was “our intent to spin off our registrar business and separate into two independent, publicly traded companies.”
The company noted that the two units “divergent strategic priorities and opportunities” would be better in the new configuration with a pure-play media company and domain services company.
The transaction is expected to take place in the next nine to 12 months, Demand said. But it still requires a number of company and regulatory approvals to do the tax-free spin-off that will create two different stocks.
The move makes a lot of sense on many levels, given the company’s two divisions have not coalesced in any way that has made much sense to investors.
As part of today’s announcement, Demand also released its fourth-quarter earnings.
Minus traffic acquisition costs, the company’s revenue for the three months was up 19 percent to $96.8 million, on net income of 12 cents of adjusted earnings per share.
Here are Demand’s two press releases from today, including its Q4 earnings: