8JUPITERMEDIA TO REDEPLOY ASSETS TO IMAGE DIVISION
August 4, 2005
Jupitermedia Corporation has signed a definitive agreement to sell its Search Engine Strategies trade shows and its ClickZ.com Network of web sites, including its well known SearchEngineWatch.com for $43 million in cash subject to certain post-closing adjustments. The purchaser is Incisive Media plc of London and the transaction is expected to close this month.
"As Jupitermedia increasingly focuses its efforts on its commercial images operation, we have looked for ways to redeploy assets to more rapidly grow our JupiterImages division," stated Alan M. Meckler, Chairman and CEO of Jupitermedia Corporation. "This sale is evidence of our intent to be even more aggressive in the licensing and distribution of commercial images. The funds received from the sale will strengthen our balance sheet and allow us to have greater buying power for more image acquisitions," added Meckler.
In the image area Jupiter acquired PicturesArts in July for $63.2 million, Goodshoot in May for $9.8 million and Creatas in February for $38.1 million in cash and stock that raised the value to around $60 million. During the quarterly conference call Meckler told industry analysts that the money from Incisive Media would be used to pay down some of the company's over $80 million in debt, much of which was incurred as a result of the recent purchases.
Jupitermedia announced that in the quarter ended June 30, 2005 revenues were $33.8 million compared to revenues of $17.8 million for the same period in 2004, an increase of 89%. Net income for the second quarter was $7.0 million, or $0.19 per diluted share, compared to net income of $3.5 million, or $0.11 per diluted share, for the same period last year.
In their quarterly report Jupiter broke down its image revenue into that earned from Art Today, its initial entry into this market and the revenue earned from acquisitions. The acquisitions include Comstock images, acquired on April 1, 2004, Thinkstock Images, acquired on July 28, 2004; Hemera Images, acquired on November 12, 2004; Dynamic Graphics Group, acquired on March 7, 2005 and Goodshoot S.A.S. acquired on May 19, 2005. For the first six months of 2005 the revenues were:
This does not include any revenue from Picture Arts which was acquired after the end of the quarter. Total revenues for the six months were $58,809 so the image division currently represents about 54% of total revenue.
Jupiter expects total revenue for the year to be between $139 and $141 million up from an estimate of $125 to $129 million at the end of the first quarter. Given PictureArts' addition to the mix the image division will represent a much higher percentage of total revenue by the end of the year. It also seems clear that more image related acquisitions are likely before the end of the year.
"We are pleased with our financial results for the second quarter, with record revenues and net income," stated Jupitermedia's Chairman and CEO Alan M. Meckler. "We have been emphasizing the development of our JupiterImages division and the second quarter illustrates continued organic and overall growth in the sales and distribution of commercial images. The acquisition of PictureArts in July marks our seventh major images acquisition since June 2003 (ArtToday, Comstock, Thinkstock, Hemera, Dynamic Graphics, Goodshoot and PictureArts). We plan to continue our acquisitions program in the coming months. Our employees are working hard to shape and integrate these acquisitions so that Jupitermedia becomes a powerful creator and distributor of a wide range of commercial images. The full impact of this integration will be more apparent in future quarters. In the meantime we continue to evolve as a company making positive financial progress not only with JupiterImages, but with our JupiterWeb, JupiterResearch and JupiterEvents divisions," added Meckler.
Recently Meckler gave an interview to MacTribe (www.mactribe.com), a new publication for Mac users that focuses on a number of issues including photography. Some of his comments provide perspective on where the company is headed. I urge everyone interested in Jupitermedia to look at the MacTribe article.
Pat Hunt of MacTribe asked Meckler if his company is only interested in wholly owned material since many of the companies he has acquired have had only wholly owned images.
He said, "Initially, we sought to be wholly owned, but over time we realized that we had to be a distributor to be totally effective. Now we have a large component of the business that is distributing, and we are looking to grow in two directions."
Meckler was also asked about Getty's recent moves to stop representing Jupiter brands and to pull its content from distribution by Creatas.
Meckler said, "Getty's actions have caused us to make counter moves. As a result, Cobris becomes a player (Jupiter has put their Comstock and Thinkstock content on Corbis). In an effort to hurt us they are really helping us because they are very aggressive with the percentages that they give to the owners of the photographs. They tighten that up every time a contract ends. Rather than going through those bruising battles, since we are one of the largest distributors now, we can pick our spots, and distribute more and more of our own [material]. I am willing to make deals with companies like Corbis, that are powerful and offer better arrangements. Getty is actually going to make us more profitable by breaking the contracts." (Jupiter has relationships with 215 distributors around the world and distributes its own brands plus the brands of about 47 other companies.)
Meckler ended the interview with, "We are just looking to work together with everybody, and have everyone make money. We are not trying to squash anybody, or put anybody out of business."
The first printed copy of MacTribe will be out in October.