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Two Online Health Site Operators to Announce
a Merger
New York Times
By Stephanie Clifford
October 3, 2008
In a deal that threatens WebMD’s dominance in the health care
space, Revolution Health Network plans to announce on Friday that
it has merged with Waterfront Media, a publisher that owns several
health Web sites.
The deal, valued at $300 million, would give the combined companies
enough traffic in the United States to compete with WebMD, now
the market leader in the online health category.
"We think we have the wind at our back, and can pass them," said
Steve Case, Revolution’s founder, referring to WebMD. He said the
combined company could "really be the new leader in this category,
which is a hot category."
The new company will operate under the name Waterfront Media.
Waterfront, based in Brooklyn, runs several sites called the Everyday
Health Network. The Revolution Health Web sites will be absorbed
into that network.
Benjamin Wolin, the co-founder and chief executive of Waterfront,
will remain as chief executive, and Mr. Case will join Waterfront’s
board.
"This deal is, obviously, a great way for us to vastly expand
the portfolio," Mr. Wolin said.
Mr. Case will continue to run Revolution L.L.C., which was the
parent company of the Revolution Health Network, which is based
in Washington, and will continue to be involved with health companies
apart from the network of Web sites.
Mr. Case, the co-founder of America Online, left that company
in 2003 after selling it to Time Warner. He founded Revolution
L.L.C. in 2005, and the Revolution Health unit in 2007. Revolution
L.L.C., whose backers include Carleton S. Fiorina, the former chief
executive of Hewlett-Packard, and Colin Powell, invests in a mix
of companies, including Zipcar and Exclusive Resorts. Revolution
L.L.C. will be a major investor in the expanded Waterfront Media.
"Clearly, getting strong C.E.O.’s to run each of the companies
is our strategy," Mr. Case said. "Ben’s done a great job building
a company."
WebMD has also been expanding. In September, it announced that
it would acquire the site QualityHealth.com for $50 million and
an additional $25 million based on performance.
Mr. Wolin said that Waterfront was profitable on revenue of $50
million last year, though he declined to provide a specific figure.
For 2009, he is projecting the company will have revenue of more
than $100 million, and will again be profitable.
The new company will operate 24 sites, including RevolutionHealth.com,
and HealthTalk.com. The Everyday Health Network already includes
EverydayHealth.com, along with niche sites like SouthBeachDiet.com
and the pregnancy site WhatToExpect.com.
Everyday Health was the second most popular health site in July
2008, with 14.7 million unique visitors, according to comScore
Media Metrix. The Revolution Health sites came in third, with 11.3
million visitors. Though traffic varies month to month, the July
figures would put the combined companies ahead of WebMD, which
had 17.3 million visitors that month.
In the last year, health sites have grown quickly. The number
of visitors has increased 21 percent, outpacing the 5 percent increase
in total Internet users United States, comScore said.
Terms were not disclosed.
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