“We believe that this transaction will be beneficial to WebMediaBrands and its stockholders as it will significantly improve our balance sheet and at the same time allow us to focus on growing BtoB communities in the non-tech space,” said WebMediaBrands Chairman and CEO Alan Meckler in a statement.

From the release:

The Board of Directors of WebMediaBrands unanimously approved the transaction and resolved to recommend that WebMediaBrands’ stockholders approve the transaction. Completion of the transaction is subject to approval by WebMediaBrands’ stockholders and other customary closing conditions. In addition, Alan M. Meckler, WebMediaBrands’ Chairman and Chief Executive Officer, and certain other stockholders, who, with Mr. Meckler, collectively hold approximately 39.5% of WebMediaBrands’ outstanding stock, have entered into definitive support agreements with QuinStreet, Inc. to vote a total of 37% of WebMediaBrands’ outstanding stock in favor of the transaction. The transaction is not subject to a financing condition. WebMediaBrands expects the transaction to be free of taxes.

WebmediaBrands will continue operating its online business, which still includes sites like MediaBistro.com and Graphics.com, as well as job boards, online education offering, and tradeshows.

The company says, "WebMediaBrands will continue to operate the BtoB online communities that were not sold to Getty Images. These communities are comprised of Internet.com for IT managers and Web developers; Mediabistro.com for media, publishing and communications professionals; and Graphics.com for design and creative professionals. These three communities have a combined 22 million unique visitors and 70 million page views."

Starting February 24, WebMediaBrands will be known byt he NASDAQ symbol WEBM. Both the name change and the sale of Jupiterimages have been approved by stockholders.

On a related note, Jupitermedia has also terminated its Credit Agreement with KeyBank National Association (KeyBank) and applied approximately $82 million of the proceeds from the Sale to repay all outstanding debt.

Revenues for the third quarter of 2008 were $31 million down from revenues of $34.8 million for the same period last year. The company says its loss per diluted share was $0.63 and included non-cash stock based compensation expense, legal fees related to the recent signed stock purchase agreement with Getty Images.

Jupitermedia is selling its online image business to Getty Images for $96 million in cash. The company expects to incur a non-cash loss of about $95 million when the sale is completed. Jupitermedia says they sale of Jupiterimages will allow it to re-focus the company on the B2B content business which is a move in the right direction.

Jupitermedia says the sale of its image business will allow it to focus on its online media business which includes internet.com, EarthWeb.com for IT and business professionals; DevX.com for developers; and Mediabistro.com and Graphics.com for media and creative professionals.

"In a very difficult business environment we have some significant highlights. Revenues from our JupiterimagesUnlimited royalty-free subscription offering grew over 100% for the nine months ended September 30, 2008 compared to the same period in 2007.

We continue to experience significant growth from our Stockxpert.com microstock offering, both with single images and subscriptions," stated Jupitermedia’s Chairman and CEO Alan M. Meckler.

"Our Online Media division continues to be impacted by the economy, which has put pressure on our advertising and job board sales. We have, however, made progress in reducing operating expenses, specifically with our costs of sales and general and administrative expenses.

In addition, we have made additional investments in our Online Media business, with the launch of three new blogs focused on Mobile media and a new event, UGCX, which is focused on user generated content and social networks."
 

This follows a difficult time for Jupitermedia which last week announced an agreement with Getty Images to sell Jupitermedia’s online image business for $96 million. Jupitermedia stated that they expected to incur a non-cash loss of approximately $95 million upon the closing of the transaction.

Chris Cardell had been President and COO since the company’s inception in 1998. Chris was very instrumental in the building of internet.com into one of the web’s top B2B and tech news and information portals.

Effective immediately, Jupitermedia’s CEO founder and Chairman Alan Meckler, will also serve as President and Chief Operating Officer of the Company.

Alan Meckler comments in the press release:

Chris Cardell has been an important contributor to the growth and success of Jupitermedia. He has been with us through our many business acquisitions, sales and other transactions, and never wavered under the pressure of a very demanding workload," stated Alan M. Meckler, Chairman and CEO of Jupitermedia Corporation. "While it is never easy to part company with a long-time colleague, we are fortunate that Chris has developed a strong management team under his direction and that we will not miss a beat through this transition. We all wish him continued success in his future endeavors," added Meckler.

Added note: This is another Chris in a string of Chris’ who have left Jupitermedia management over the years as we reported in this 2006 blog post.

Jupitermedia’s board of directors has approved the transaction and has recommended that its stockholders approve the deal as well. The deal has to receive regulatory approvals and customary closing conditions.

Alan Meckler, Jupitermedia’s Chairman, Chief Executive Officer and a significant stockholder, and certain other stockholders, collectively own 35.9 percent of the company’s outstanding stock, already have the votes lined up to agree to the deal.

With the sale of its image business Jupitermedia will now focus on its online media business, which consists of five networks: internet.com, EarthWeb.com for IT and business professionals; DevX.com for developers; and Mediabistro.com and Graphics.com for media and creative professionals.

Jupitermedia will retain ownership of its Peoria, Illinois building and property and lease the facility to Getty Images. Jupitermedia expects to incur a non-cash loss of about $95 million when the deal is completed.

"We believe that this transaction will be beneficial to Jupitermedia and its stockholders, both in the near term and the long run, as it will allow Jupitermedia to pay off all of its bank debt. Upon closing of the transaction, we will continue focus on the further development and growth of our Online Media division," stated Alan Meckler.

 Jonathan Klein, co-founder and CEO of Getty Images stated, "Jupiterimages has built a foundation that Getty Images will build upon to the benefit of customers worldwide". Klein added, "Getty Images has always been dedicated to making strategic investments that will provide long-term value to our customers".

A previous deal to sell Jupitermedia to Getty Images fell apart in February 2007. That deal according to press reports was for around $450 million, with a potential buyback of non-image assets such as internet.com for $100 million.

Jupitermedia founder, Alan Meckler

[Disclosure: I own shares in Jupitermedia and have since I was employed there in 1998-2000. My opinions here are purely my own and I have no current inside knowledge about the company.]

Jupitermedia owns in my opinion the best domain the Internet has produced, internet.com. With the company severely undervalued by the market, I believe they should re-brand Jupitermedia as internet.com again. The company had its greatest success under this brand and could use this name recognition to remake the company as the great B2B content network it was.

This is not to say that Jupitermedia still does not produce great content, because it does. However, the buzz that internet.com was the Internet’s next Cnet.com and the place to go for internet business and tech content has been somehow lost in the shuffle of their growth and focus over the last few years.

It’s obvious that the image market (which Jupitermedia is currently a top three player in) has proven very difficult. Micro image sites that sell images for a dollar or less have commoditized the image economy and this has taken the growth out of the digital image industry. In the long run, this division of Jupitermedia needs to be sold, spun off or otherwise separated from their content side.

I have seen suggestions that Jupitermedia ought to change its name to mediabistro.com, after the site was purchased for $23 million a short fourteen months ago. I think that would be a mistake that would serve to lower their name recognition, not raise it.

A name change to internet.com, on the other hand, would have huge name recognition from the start and would tell its advertisers and its site visitors that the business and tech content giant is back and roaring!

Let me know your thoughts on this below…

The company had slightly higher revenues of $35 million for the second quarter, compared with 34.6 million last year.

Loss per diluted share was $0.09 and included non-cash stock-based compensation expense of $0.07 per diluted share. Loss per diluted share was $0.02 and EBITDA was $5.3 million for the second quarter of 2008.

"Revenues from our JupiterimagesUnlimited high level royalty-free subscription offering grew over 90% from the first half of 2007 to the first half of 2008," said Alan M. Meckler, Jupitermedia’s Chairman and CEO.

"We also continue to experience significant growth from our Stockxpert.com microstock offering, both with single images and subscriptions. Our backlog for both JupiterimagesUnlimited and our Stockxpert.com microstock subscription offerings continue to increase which bodes well for future revenues."

"We have also made additional investments in our Online Media business, with the launch of our Graphics.com/Learning.com online education offering, new editorial Web sites and new events," said Meckler.
 

 Jupitermedia’s Stock Problems

It’s not so bad that we’re going to use any "falling from the sky" or kryptonite-related comparisons.  It’s just not good.  The Nasdaq has risen by 2.26 percent so far, but Jupitermedia is down by 3.50 percent.  On to the earnings, then.

Dan Wieman writes, "The company reported a slight revenue increase in 2007, but earnings per share came in at a negative $2.13 per share.  This earnings number is discouraging and a bit misleading.  Excluding its one-time charges and non-cash items, their earnings for the year would have been $0.06 per share."

But here’s another problem: "the impairment charge of $82.2 million, or $2.28 per share.  Jupitermedia still has $143 million in goodwill on its balance sheet.  Total shareholder equity is still $160 million, or $4.44 per share.  So, why write-down only $82.2 million? Maybe the company can’t due to some accounting rule, but it is the season for massive write-downs of fake assets. There is not only this, but the company provided no information about this impairment charge."

In other recent Jupitermedia news, the company announced its acquisition of eStockMusic.com exactly one week ago.

The purchase adds a micropayment music business to Jupiterimage’s micropayment offerings of royalty free digital images and footage on Stockexpert.com.

eStockMusic’s library is searchable and allows customers to listen to tracks before they make a purchase. Tracks sell for $1.00 for a minute and are available for direct download.

If you produce music you can sell your music by registering on the site. After registering you can start uploading your music tracks.

"We are very excited to launch one of the first micropayment music businesses in the world," stated Alan M. Meckler, Chairman and CEO of Jupitermedia Corporation. "eStockMusic.com joins our RoyaltyFreeMusic.com, StudioCutz.com and Blue Fuse Music properties. We now offer royalty-free digital music to fit every budget and need," added Meckler.
 

GettyImages
(Photo Credit: GettyImages)

Since the announcement, Getty’s shareprice has jumped by over 30%, but the market cap is still at around $1.91 billion. CEO Jonathan Klein had long argued that the stock was undervalued, and Getty would go to the buyer that valued the company appropriately.

As recently as February 11, though, it looked like Getty was having trouble finding takers, especially during an uncertain financing climate. Hellman & Friedman found that financing via Barclays Capital and RBS Greenwich Capital.

Klein had cited Getty’s undervalued stock as a reason for selling, and not the increasingly competitive and ever less-exclusive stock images market online. Though Getty charges in excess of $200 per use of image and counts major-league clients like the New York Times as clients, demand for less expensive, even lower quality images for burgeoning blogs and online publications make the image market and unsure bet.

It would seem Hellman & Friedman were less uncertain about it. “Getty Images is the leader and pioneer in the visual content and digital media business," said Andy Ballard, managing director of Hellman & Friedman, in a statement. "We believe in the vision and execution capabilities of Jonathan Klein and his team, and share their commitment to the Company’s stakeholders and customers."

A year ago, Getty was rumored to be in talks to acquire the third largest stock images company, Jupitermedia for an estimated $450 million, which certainly would have been an excellent price for Jupitermedia CEO Alan Meckler, given the company’s current $115 million market cap. Perhaps closer to double instead of triple the value would have made the deal go through and Getty would have gone for closer to $3 billion.

When the rumor that Getty would be purchased sprang up about a month ago, Meckler took it as a good omen for his company even though it appeared Getty was looking for a bail-out.

Meckler wrote on his Jupitermedia blog, "While the Getty team might be bailing out, management at Jupiterimages remains confident that we have the best chance of the big three in the image industry to come out on top. We are the only company with the right mix in this difficult environment to hopefully create a solid business model for success.

"The key is understanding and executing in the subscription arena. RF Subscription models combined with strong Rights Managed and microstock offerings is the only way to survive in future years. Only Jupiterimages is doing well in all three of these segments."

Meckler promised more commentary if Getty was sold, but has not, as of yet, updated.

Regardless of history, it seems what’s good for Getty is good for Jupitermedia. Shares of Jupitermedia are up 5%, even if it has a ways to go before recapturing its 52-week high of $9.25, a price set right around that Getty purchase rumor.