Bodybuilding.com Sold By Liberty Media to Expedia Group
Since early 2018, I started to publicly predict that the nutritional supplement internet retailer Bodybuilding.com would be sold by Liberty Media…
A decade before my predictions, Liberty Media bought Bodybuilding.com from Ryan Deluca (and his family) in 2008. Despite the acquisition happening at the start of the economic crisis, the website’s performance flourished as digital commerce and functional CPG categories like sports nutrition grew aggressively in parallel.
The mid-2010s brought a dynamically changing competitive landscape that started to show cracks in the armor of Bodybuilding.com as the growth slowed to a halt. Then, in late 2015, Founder and CEO, Ryan Deluca, stepped down to pursue other business interests. Though challenges were apparent before Deluca’s departure, it further accelerated them with the departure of many senior leadership level employees, many of whom were hired by Deluca family members since they founded the company in 1999.
As Amazon focused more on the functional CPG product categories and the “Amazon Effect” started to happen with buyer behavior, it became troublesome at the supplement web retailer. In 2016, Bodybuilding.com had a down year for revenue growth, which to my knowledge was the first and only to that point. Next year, it happened again, but this time it was worse…
Why Predict Publicly?
Initially, my inclinations that Liberty Media would sell Bodybuilding.com stemmed from these performance woes…
Then, it was the layoffs…accounting goodwill write-down…selling the headquarters…and then another year of declining revenue in 2018…
If you watch my YouTube channel, you know that I cover the quarterly financial reports of Liberty Expedia Holdings (NASDAQ: LEXEA). Liberty Expedia Holdings is the Liberty Media holding company that owned Vitalize, LLC (better known as Bodybuilding.com) and also a minority share of the travel company Expedia.
In one of those recent reports, I realized there were some prior contracts from the Expedia transaction from John Malone (owner of Liberty Media) and Barry Diller (owner of Expedia Group) that had an expiration on them with voting proxies/shares in May 2019.
That was when I knew some type of transaction would have to happen before that time frame. Well…
Who is Expedia Group?
Despite potentially getting confused because of the Liberty Expedia Holdings name, Liberty Media and Expedia Group are not the same company or subsidiaries of the same company. With Expedia Group now being the owner of Bodybuilding.com, it might be best to get a sense of who they are…
Expedia Group is made up of the following travel entities:
Expedia®, Hotels.com®, trivago®, HomeAway®, VRBO®, Orbitz®, Travelocity®, Hotwire®, CarRentals.com™ and many more…
Do you see anything that can be remotely synergistic to Bodybuilding.com?
So…I go back to an earlier question that I pondered in this article…
Who ultimately wants to own Bodybuilding.com? More importantly, who thinks they can create and execute on turnaround plans that are successful in this current competitive environment?
External Strategics
As stated in that prior article, these could be way off, but they are simply here to create some additional thought provoking angles…
- Amazon — this would take out the biggest e-commerce competitor in the category and they could use the media team to build out content for video
- Walmart — if they want to keep up with Amazon in the product category, they might want to grab this for defense. Walmart is a growing major player in functional CPG and this is a huge consumable category online
- Google or Facebook — they both will want into retailing at a deeper level soon and they might look at one of the biggest consumable categories to start their marketplace
- Alibaba — same reason as Google or Facebook, but it helps Alibaba get further into the North American market
- GNC or The Vitamin Shoppe — this is very unlikely, but weirder things have happened in M&A
“Internal Strategic” Emerges?
Barry Diller has his hands in A LOT of businesses and its not uncommon to shift businesses around in an effort to create synergies.
That brings me to InterActiveCorp (NASDAQ: IAC)! What does IAC own?
- Match Group — dating sites like Match.com, Tinder, and Plenty of Fish
- Publishing — sites like Investopedia
- Applications
- Home Services — sites like Angie’s List, HomeAdvisor
- Video — College Humor, Vimeo (…some potential here), but then you have…
Daily Burn
Daily Burn is a health and fitness company that provides workout and nutrition programs on a variety of web, mobile, and TV apps. Daily Burn streaming workout videos are led by master trainers.
I couldn’t find 2018 membership numbers, but in 2017, the platform was said to have approximately 2.5 million active members.
Now we are potentially getting somewhere with some promise!
- Bodybuilding.com All Access
- A retailer with a brand equity that is still very strong with a network of fitness influencers looking to monetize
- BodySpace (I know…I know, it’s essentially dead, but the bones are there to reuse)
So, how much can 2.5 million memberships convert to in product sales?
Unfortunately, there isn’t an apples to apples comparison or any type of modeling that I could create that would be valid to post about publicly, but here is just something to ponder…
There are 6 million Vitamin Shoppe Healthy Rewards members, which account for 90% of the retailer’s $1.1 billion in revenue.
Even on the lowest end of any model, it could provide a strong boost to Bodybuilding.com’s revenue that was only about $226 million in 2018.
*Please Note that this article has tons of speculations, predictions, and theories that are for entertainment only. Anything in this article should not be taken as investing advice or used for anything that isn’t solely for entertainment.
