Jupitermedia Corporation

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Jupitermedia Corporation

23 Old Kings Highway South
Darien, Connecticut 06820
U.S.A.
Telephone: (203) 662-2800
Fax: (203) 655-4686
Web site: http://www.jupitermedia.com

Public Company
Incorporated: 1999 as Internet.com Corporation
Employees: 339
Sales: $71.9 million (2004)
Stock Exchanges: NASDAQ
Ticker Symbol: JUPM
NAIC: 541513 Computer Facilities Management Services

One of the first companies devoted to the Internet, Darien, Connecticut-based Jupitermedia Corporation is one of the few to survive the dot-com meltdown, due in large measure to the willingness of Alan M. Meckler, the company's founder, chief executive, and chairman, to adapt to changing conditions. Jupitermedia's business is organized within three divisions. Jupiterimages offers a wealth of stock graphics, photos, and footage to both industry professionals and general consumers, either by subscription basis or as a single image download. The unit also produces two print magazines for design professionals: Dynamic Graphics Magazine and STEP Inside Design Magazine. JupiterWeb operates four online networks for Information Technology professionals: Internet.com, which offers 12 content channels; EarthWeb.com, offering content for six different professional audiences (including IT managers, software developers, and Web developers); DevX.com, providing software development information for international professionals; and Graphics.com, a network devoted to creative professionals, offering news, tutorials, a forum where professionals can communicate, and a gallery where work can be displayed. The third division is Jupiterresearch, providing research, analysis, and consulting services to help businesses get the most out of the Internet and other emerging consumer technologies. Jupitermedia is a public company listed on the NASDAQ. Meckler owns a 37 percent stake.

Meckler Becoming Involved in Publishing in the Early 1970s

Alan Marshall Meckler was born in Queens, New York, in 1945. Despite suffering from dyslexia, a condition not diagnosed until he was well into his 50s, he earned three degrees in American history from Columbia University. He was able to turn his disability into an advantage: Learning how to listen closely rather than taking notes in class provided him with the skill of focusing on what was important and avoiding getting sidetracked. It was a skill that would become key to his business career, as Meckler was quick to identify business trends well ahead of the competition. One of those trends was the rise of the Internet. After completing his education, Meckler became involved in the publishing field. In 1971 he founded his own company, Microform Review, Inc. in Weston, Connecticut, which subsequently became part of a larger concern, Meckler-Media Corporation. He also found time to author several books on American history as well as other subjects, such as The Complete Guide to Winning Lotteries by Mail.

In 1990 Meckler was quick to realize the potential of the Internet, well before the graphic interface made it easy to navigate and only the heartiest of souls were willing to learn the arcane programming language necessary to "telnet" and "ftp" their way through cyberspace. Meckler believed the Internet was an ideal way to deliver computer-related content to librarians, information end-users, and specialists. His first notion was to create an electronic storefront of technology publishing resources, including books, magazines, and newsletters, the first step in establishing a complete electronic publishing division.

Meckler started out in October 1990 with the launch of Internet World newsletter, and he soon enjoyed solid success organizing Internet World trade shows, but in the first couple of years he struggled to make money. In 1992 and 1993 he was on the verge of corporate as well as personal bankruptcy, but he managed to hang on through a loan from Union Trust and by selling a third of his company for $1.25 million.

In February 1994 Meckler was able to take MecklerMedia public, raising nearly $5 million. His first Internet acquisition, the first of dozens over the next few years, was the $50,000 purchase of The List, a directory of Internet service providers (ISPs). He then attempted to launch MecklerWeb, which he envisioned as a "knowledge exchange," targeting a wide swath of companies and organizations, including think tanks, finance firms, and entertainment companies, which were to pay $25,000 to $50,000 each for a slot on the site. The goal was to attract an upscale online audience to which participants could market. However, only one customer, Anderson Consulting, was willing to pay a $25,000 fee to participate, prompting Meckler to kill the idea. He then sought to impose a more traditional publishing model on MecklerWeb supported by advertising. The content of three MecklerMedia magazines, CD-ROM World, Internet World, and Virtual Reality World, were put online, with the hope that other specialized publications would be recruited to participate in the future. In November 1994 Meckler sold CD-ROM World, and a month later reorganized MecklerMedia, packaging mecklerweb.com and another site, iworld.com, into a separate division, Internet.com.

Internet World also was revamped and began to shift away from a technical audience to a more mainstream one, as user-friendly web browsers including Netscape became available. The publication alerted readers to interesting new web sites, maintained its own home page, and sponsored the hottest trade show in the industry. Other Meckler print publications also focused on the tech sector, such as the quarterlies Web Developer and Web Week, an Internet trade paper of record.

As forward-thinking and ambitious as Meckler was, however, he lacked the financial resources of much larger media companies. In November 1998 Meckler sold MecklerMedia Corporation to Penton Media, Inc. for $274 million, pocketing a 1,000 percent return on his investment. As part of the deal, Penton immediately sold Meckler an 80.1 percent interest in Internet.com L.L.C., a subsidiary created by Penton to house MecklerMedia's Internet assets. As a result, Meckler was fully committed to the Internet and had the money he needed to become more competitive.

Internet.com Going Public in 1991

In April 1999 Meckler incorporated Internet.com Corp. in Delaware and two months later took the company public at $14 a share in an initial public offering of stock underwritten by U.S. Bancorp, Piper Jaffray Inc., William Blair & Co., and DLCdirect Inc. Internet.com netted $42.8 million. Almost $5 million of the money was used to pay down debt and the rest was earmarked for strategic acquisitions. In addition to using Internet.com to acquire web sites and other online assets, Meckler used it to launch venture capital funds to invest in early-stage content-based web site businesses that focused on business-to-business markets and did not compete directly with Internet.com. The company also launched a pair of complementary web sites, InternetVCLinx.com and InternetVCWatch.com, to provide information on venture capitalists and track investments in Internet companies.

The close of the 1990s and start of the new century were heady days for Meckler and Internet.com. It operated a network of advertisement-supported web sites, e-mail newsletters, online discussion forums, and began hosting a number of face-to-face forums. (In keeping with the sale to Penton, Meckler was prohibited from entering the trade show business for two years.) In December 1999 Internet.com opened news bureaus in Boston and Washington, D.C., to provide local coverage on industry news and Internet investments. Although the company was posting net losses, sales were growing as Meckler proved adept at converting his content and web sites into a number of diversified revenue streams, such as syndication, licensing, and e-commerce partnerships. The price of Internet.com also grew at a strong clip, eventually topping $70. About $6 million of that stock would be put to use in September 2000 when Meckler completed his largest acquisition since 1994: the $16 million purchase of ClickZ Corp., which through its ClickZ.com web site provided online marketing industry analysis.

The dot-com bubble soon burst, and although Internet.com was better established than the vast majority of Internet ventures and boasted actual revenues, more than $52 million in 2000, and was at its heart a publishing company, it was punished along with the rest of the players in the sector. In February 2001, as ad revenues tailed off, the company was forced to lay off about 15 percent of its 400 employees. (About two years later that number would be reduced to 260.) "We have been the whipping boy because of the name," Meckler told the Wall Street Journal, which also interviewed Edward Saenz, founder of naming consultant Gravity Branding, who commented, "Anything today that says Internet only or dot-com only has warning and hazard signs all over it." He added that a name including both, like Internet.com, suffered "a double whammy." It was not surprising, therefore, that Meckler changed the name of the company to INT Media Group Inc. in May 2001.

Adopting the Jupitermedia Name in 2002

Despite the name change the price of the company's stock continued to slide until bottoming out at $1.50 in September 2002. By this time the company had changed its name once again, the result of an acquisition. A month earlier Internet.com paid $250,000 for the Jupiter Research and Events business of New York City-based Jupiter Media Metrix Inc., which had been selling off its assets in recent months after failing to negotiate a merger with competitor Nielsen/NetRatings. Jupiter Research had been in business since 1986 as an international research organization that was now a widely respected research firm specializing in Internet-related market research in a number of business areas. Not only did the acquisition mark Meckler's return to the trade show business, it also provided him with a brand name to exploit. In September 2002, INT Media Group, a name Meckler dismissed as "not memorable," became Jupitermedia Corporation.

Company Perspectives:

Jupitermedia Corporation, headquartered in Darien, CT, is a leading global provider of images, original information, and research for information technology, business and creative professionals.

Meckler was quick to build on Jupiter Research's trade show business, which was launched at the end of 2001 and quickly spread from the United States to Germany and Australia. Recast as Jupitermedia's 802.11 Planet trade shows, they were geared toward the promotion of the Wi-Fi revolution for Internet access service providers. Meckler told the Hartford Courant, "This thing is a real horse; Kentucky Derby material, Triple Crown material." He also decided to launch a computer industry trade show to challenge the one conducted by Comdex. At the same time, Meckler was not neglecting his other Internet interests. In June 2003, Jupitermedia acquired ArtToday.com, a subscription service for photographs and commercial art, paying $13 million in cash plus stock and other considerations. Two weeks later, Jupitermedia acquired the assets of DevX.com for $2.25 million and 200,000 shares of stock. DevX operated a network of web sites serving the international software community by focusing on software development issues concerning specific products and areas, such as Windows programs, Web development, Java, XML, .NET, c/c + +, Visual Basic, wireless applications, and database applications. Clients included corporate giants such as Microsoft, IBM, Intel, and Nokia.

Sales grew to $71.9 million in 2004 and Jupitermedia also turned a profit of $15.7 million. Meckler was not about to become complacent, however, forever adjusting Jupitermedia's business mix to take advantage of opportunities in the marketplace. He became particularly aggressive in the stock photo and image field. In February 2005 Jupitermedia paid $64.4 million in cash and stock to acquire Creatas L.L.C., which owned Dynamic Graphics Inc. and PictureQuest Acquisition Group. Then, in July, Jupitermedia bought PictureArts Corp. for approximately $63.2 million in cash. Meckler was clearly enamored with the potential of this line of business. All told, Jupitermedia spent $200 million in acquiring seven online photography companies since 2003, and they were a large reason for Jupitermedia becoming profitable. Trade shows, on the other hand, provided lackluster growth, with revenues in 2004 just short of $10 million and a net profit of $1.4 million. In August 2005 Jupitermedia sold its Search Engine Strategies (SES) trade shows, SearchEngineWatch.com web site, and ClickZ.com network of web sites to London-based Incisive Medias for $43 million in cash, with the money earmarked to pay down the debt incurred from the recent acquisitions. SES was the only Jupitermedia trade show brand to show much promise, and Meckler was eager to sell the business while it was hot. "This sale is evidence of our intent to be even more aggressive in the licensing and distribution of commercial images," Meckler explained in a press statement. "The Funds received from the sale will strengthen our balance sheet and allow us to have greater buying power for more image acquisitions." Meckler, as reported by Tradeshow Week, told analysts during an earnings call, "Essentially, with the sale of SES, for all intents and purposes, we are out of the tradeshow business." He was quick to add, "We'll keep our options open, since we have shown great skill in coming up with tradeshow ideas over the years." Given Meckler's track record for ferreting out new opportunities, there was no way to predict in what direction he would take Jupitermedia in the future.

Principal Subsidiaries

Jupiterimages Corporation; Creatas, L.L.C.; Dynamic Graphics, Inc.; PictureQuest Acquisition Company, L.L.C.

Principal Competitors

CNET Networks, Inc.; International Data Group, Inc.; Ziff Davis Media Inc.

Key Dates:

1990:: MecklerMedia launches the first Internet-related publication.
1994:: MecklerMedia establishes the Internet.com division.
1998:: MecklerMedia is sold, and its Internet assets are spun off into Internet.com Corp.
1999:: The company is taken public.
2001:: The name is changed to INT Media Group Inc.
2002:: The name is changed to Jupitermedia Corporation.