Liberty to Bulk Up Internet Portfolio
Liberty Media Corp., in the latest move to beef up its portfolio of Internet businesses, is expected to announce today that it has bought a controlling stake in sports-nutrition retailer and fitness Web-site operator Bodybuilding.com LLC.
Context & Ripple Effects
Liberty Media's expected purchase of a controlling stake in Bodybuilding.com lands in the middle of a run of traditional media companies buying their way onto the web rather than building audiences themselves: Discovery laid out plans to acquire a web site in October 2007, and Penthouse followed in December with a bundle of social-networking sites.
Bodybuilding.com fits the pattern those deals established — a niche content site fused with a real e-commerce business (sports nutrition retail), which gives an acquirer revenue on day one instead of just traffic. For Liberty, whose portfolio has been built on cable and media assets, it marks a deliberate tilt toward operating Internet businesses directly.
First-order effects
- Bodybuilding.com gains a deep-pocketed parent at a moment when standalone niche sites face rising traffic-acquisition costs, while Liberty immediately adds a profitable-looking content-plus-retail asset to its Internet holdings.
Second-order effects
- Rival media groups that have been shopping for web properties — Discovery and Penthouse among them — now compete against Liberty for the same finite pool of category-leading niche sites, likely pushing valuations up for any fitness, health, or hobby site with proven commerce revenue.
Third-order effects
- If the 2007-08 acquisition cadence holds, the structure of the web tilts toward content-commerce hybrids owned by diversified holding companies, with independent vertical sites increasingly exiting to conglomerates rather than scaling alone.
The trend: Diversified media holding companies are acquiring niche content-and-commerce websites outright rather than building competing properties, making category-leading verticals scarce acquisition currency.