Demand Media cuts ties with Lance Armstrong

Steven Loeb · November 12, 2012 · Short URL:

Media platform will continue to work with Livestrong, which Armstrong will no longer be a part of

I’m going to be totally honest with you here: I do not care that Lance Armstrong cheated in the Tour de France. Not one bit.

First of all, the U.S. never cared about cycling, until we actually started to win in the sport. And once we stopped winning? Surprise, surprise, we stopped caring about it. On top of that, this guy survived brain and testicular cancer. I would bet that most people, even with performance enhancing drugs, couldn’t cycle to the end of the block without being winded. Plus, there is his whole LiveStrong Foundation, which is dedicated to donating money to cancer research. So I cut this guy a lot of slack.

Sorry, rant over.

My opinion, for what its worth, is definitely in the minority though, and just about everyone else has turned on Lance Armstrong as if he was the world’s most notorious child murderer. After it was found out that he was doping, he was dropped by his sponsors Anheuser-Busch, RadioShack and Nike, was stripped of his seven titles and may even lose his Olympic medal he won in 2000.

The latest company to publicly declare that they no longer want anything to do with Armstrong is Demand Media , AllThingsD is reporting.

Demand Media struck a four year deal with Livestrong in 2008 to create a health and wellness site, and also got a perpetual license to the domain name. The company says that it will continue to operate Livestrong, where Armstrong has stepped down as chairman. (It was originally reported that he would remain as the head of the board of directors at the Foundation, but it was reported Monday that he would be stepping down from the board as well.)

Here is what Demand Media CEO and co-founder Richard Rosenblatt is quoted as saying:

“Our relationship is with the Livestrong Foundation, not with Lance, and we are aligned in empowering people to live healthier lives, and we support the important work of the foundation. We have built a powerful destination, popular applications and a very engaged community. None of this has changed and we have seen no material impact on the consumer traffic or metrics.”

Kristen Moore, VP of Corporate Communications & Marketing, told VatorNews that, "We don’t have direct ties to Lance Armstrong. Our ties are with the Livestrong Foundation," and pointed to an October blogpost from Michael Kirby, Senior Vice President & General Manager at Demand Media, in which he wrote:

"Recently, the Livestrong name has been called into question. We have closely followed the news and commentary on the Livestrong Foundation’s founder, Lance Armstrong. We don’t believe the struggles of one individual should detract from the millions of real people who have benefited from work that’s been done to prevent cancer and improve the lives of those unfortunate enough to have it. While we have no direct relationship with Mr. Armstrong, we do continue to support efforts to empower people to live healthier lives, including the type of work the Livestrong Foundation is doing."

The most ironic thing about all of this is that when Demand Media filed to go public in 2010, it stated in it’s S-1 that one of the risks to the company was if one of its clients, or celebrities associated with one of its clients, ever fell from grace. Not only that, but it specifically named Livestrong as one of those companies where that was a possibility.

“Furthermore, certain of our owned and operated websites, such as, are associated with high-profile experts to enhance the websites’ brand recognition and credibility. In addition, any adverse news reports, negative publicity or other alienation of all or a segment of our consumer base relating to these high-profile experts would reflect poorly on our brands and could have an adverse effect on our business,” Demand Media wrote.

So far, Armstrong’s failings have not hurt the company, which released a strong quarterly earnings report earlier this month.

Revenue for the quarter was $98.1 million, up 20% from $81.5 million for the same period in 2011. Analysts were expecting revenue of $91.5 million.

Net income for the third quarter was $3.2 million, or 4 cents per share, compared with a loss of $4.1 million, or a loss of 5 cents per share, in 2011.

The company also raised its full-year forecast to between $359.8 million and $361.8 million from $355.5 million to $359.5 million.

The growth the company saw was partially driven by increased traffic on Livestrong, the company said.

Demand Media went public  January 25, 2011, with an IPO price of $17. It hit a peak of 40% on its initial trading day to reach $23 a share, before ending at $22.65, a rise of 33.2%. In all, Demand Media raised $151.3 million.

Demand Media stock is currently down 0.47%, trading at $8.44 a share.

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Demand Media is building a different type of new media company. With a proprietary media platform that powers the company's highly-trafficked domains and wholly-owned content media properties, Demand Media leverages cutting edge, user-driven publishing, community and monetization tools in its quest to define the next generation of new media companies.


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