Demand Media Says It Will ‘Explore’ Split Into Two Separate Companies

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In today’s fourth-quarter earnings report, Demand Media (which operates sites including eHow.com and Livestrong.com, and which has been criticized for being a “content farm”) says it’s considering a plan to split into two publicly traded companies, one focused on content and one focused on website registration.

In the earnings press release, chairman and CEO Richard Rosenblatt says:

We improved content quality and diversified our distribution channels by successfully revamping our content platform in 2012, and are now prepared to significantly increase our content investments in 2013. In addition, we became a leader in the generic Top Level Domain opportunity, due to substantial investments we made in 2012. We plan to increase this investment ahead of the expected launch later this year.

As a result of these two different growth opportunities, we also announced today that our Board of Directors has authorized a plan to explore the separation of our business into two independent publicly-traded companies via a tax-free spin-off. If approved, the separation will facilitate better operational and strategic flexibility, enabling each business to focus on its distinct priorities and growth opportunities.

The release notes that Demand Media acquired Name.com at the end of last year, which should expand its registrar business.

Demand’s content and media business brought in $227 million in revenue (minus-traffic acquisition costs) last year, up 18 percent from 2011. Meanwhile, revenue from the registrar business is up 12 percent to $134.2 million.

For the past quarter, the company reported total revenue of $103.1 million, with net income of $4.7 million.