Demand Media Acquires Society6

Demand Media®

today announced that it has acquired Society6, a leading digital marketplace powered by artists. The e-commerce marketplace enables artists to seamlessly upload and merchandise unique artwork and sell a variety of products, such as phone cases, art prints, home décor, and other merchandise. Society6 further expands Demand Media's content & media platform through Society6's fast growing e-commerce marketplace that includes more than 100 million product SKUs and a community of over 300,000 members. Total consideration is approximately $94 million, consisting of $75 million in cash and approximately $19 million in common stock at close. “Society6 augments and diversifies our content & media platform by adding an innovative e-commerce marketplace with multiple traffic sources and a large community of talented artists. This acquisition will significantly accelerate the scale of our e-commerce business as we continue to expand into new revenue models,” said Richard Rosenblatt, Chairman and CEO, Demand Media. Rosenblatt added, “We intend to expand Society6 by offering their unique marketplace to our existing media audience of over 100 million unique global visitors per month. In addition, we plan to leverage our expertise in managing content creation platforms, our experience in building creator communities, and our significant engineering and product resources to further drive Society6's scale and growth.” “Our team is excited to join Demand Media because they understand the importance of content creators and will help expand our community of artists and our audience,” said Justin Cooper, co-Founder, Society6. “We are looking forward to benefitting from Demand Media's expertise to accelerate the success of our marketplace.” About Society6 Founded in 2009 in Los Angeles, CA, Society6 is a rapidly growing online marketplace powered by hundreds of thousands of artists from around the world. Society6's commerce platform enables artists to easily upload and immediately offer their art for sale as art prints, iPhone cases, home décor, t-shirts and a variety of other high quality products - without giving up the rights to their work. Society6 produces these products on-demand, using only the highest quality materials and processes and then delivers them to consumers worldwide on behalf of the artist. Further Transaction Detail For the twelve months ended December 31, 2012, Society6 reported approximately $15 million and $4 million in revenue and operating income (unaudited), respectively. A slide presentation with an overview of Society6's business and additional details regarding this transaction can be viewed on Demand Media's investor relations website at ir.demandmedia.com. Updated Demand Media Business Outlook Demand Media is updating its previous outlook for the second quarter of 2013, issued May 7, 2013 as follows: Demand Media expects revenue to be in the range of $100.0 million to $101.0 million, and revenue ex-TAC to be in the range of $95.5 million to $96.5 million, due to a reduction in search engine referral traffic to its Owned & Operated sites in May and June 2013. The Company expects Adjusted EBITDA to be in the range of $26.0 million to $27.0 million. The Company is reaffirming its expectation for Adjusted Earnings Per Share in the range of $0.08 to $0.09. The Company expects the weighted average diluted share count to be 88.0 million to 89.0 million. The Company is not updating or reaffirming its full year 2013 outlook at this time and plans to discuss its full year outlook, including the impact of the Society6 acquisition and the recent reduction in search engine referral traffic to its Owned & Operated sites, when it reports second quarter 2013 results.