What is Bodybuilding.com’s Future?
Do you remember the point at which you “feel in love” with the work you do today? I can!
In college, I started to work at the Recreation Center on campus during my junior year. I had just finished a challenging international tax strategy internship at Deloitte and my mind was mush. Instead of getting another high paying internship, I decided to get a “fun job” at the university fitness center making minimum wage (back then it was like 5.25/hr or something in Ohio). I had always loved working out but it wasn’t until I met a group of guys that competed in bodybuilding shows that I took a deeper interest.
That interest led me to the Bodybuilding.com (BBcom) forums to learn about everything related to fitness, health, and supplements. During that time on the forums, I had a chance to meet different people with similar interests but more importantly I was able to directly speak with owners of supplement brands. If you remember the late 2000’s, this was the heyday of activity for the BBcom forums. What first was simply an act of getting “free products” turned into relationships that I still have today and ones that catapulted my career into the functional CPG space.
I tell this story because I owe a lot of my success to those early moments where I feel in love with the vitamins, minerals, and supplement category of consumer packaged goods. This history creates a type of kinship that you want to see “well” for it, regardless of its current situation.
What am I talking about when I say “current situation”?
- Two straight years of decreasing revenue of about 25%
- Leadership Team has been a revolving door in Boise
- They have seen extreme job cuts at the internet specialty retailer
- 2018 Yearly Recap in LEXEA (stock ticker that owns BBcom) reports in a few weeks
The competitive landscape is very different than when Liberty Media bought controlling interest in BBcom in 2008. Because of that, its obvious things are going to need to change…and fast!
In this article, we are trying to answer two questions:
- Will BBcom be sold (and to who) or kept by Liberty Media?
- If its kept by Liberty Media, what do they do next?
Does Liberty Media Sell?
To be honest, I am leaning toward this one in the next 18 months. Here are some of my rough thoughts why…
- In 2016, BBcom was dumped into Liberty Expedia Holdings. That holding company is essentially the BBcom LLC and a 16% holding of Expedia. Based on reports, Liberty Media thought the value of Expedia was underpriced and it wanted to break it out a bit to get more and also help with tax purposes of the owners. I believe this also put with Expedia because it needed operating entity to pair with passive investment.
- In 2018, the goodwill was at full impairment (which essentially means the holding company has written off its long-term value)
- This could be considered minor but they also sold BBcom’s office in Boise (leased back some of it for several years)
Who Would Want to Buy Bodybuilding.com?
These could be way off but they are simply here to create some additional thought provoking angles…
- Amazon — this would take out the biggest 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 defensive but I think because BBcom doesn’t have much for “owned” brand assets, Walmart would pass
- Google — they will want into retailing soon and they might look at one of the biggest consumable categories to start their marketplace
- Alibaba — same reason as Google but it helps Alibaba get further into the North American market
- GNC/The Vitamin Shoppe — this is a hard pass for my analysis but weirder things have happened in M&A
Liberty Media Keeps Bodybuilding.com
This is obviously difficult to consider when we are talking about a media conglomerate like Liberty Media. I think the obvious one is additional tax benefits. Outside of that, the biggest questions revolve around the willingness to rebuild.
Is Liberty Media willing to rebuild?
If they go off script and rebuild, what is the aspiration level now for Liberty Media?
This are questions that circle my mind but they all lead to its just too far off script for a media conglomerate to retrench and rebuild something when they can use those resources in a million other ways.
What are Bodybuilding.com’s Attractive Assets?
- Customer Data — they own a lot of key customer data in the elusive Millennial demographic
- Domestic Brand Equity — the BBcom name still brings a positive effect on people that buy supplements in the U.S.
- Private Label — they have a growing private label business but there is still tons of runway on growth of this revenue stream. They have the data and should be able to make great products, at great prices, that customers want.
- All Access Media Company — they have always had a great media team and they can rebuild around this key advantage if they can rebuild the relationships with brands and athletes. This should be the place where fitness brands build their business but it hasn’t been built that way at the start.
- BodySpace — this one just might be past repair but I still think a social media platform based on a goal-oriented subject like health and fitness is powerful.
Conclusion
I might be tough on BBcom from time to time but its tough love. I want the best for BBcom…I really do! Regardless of its direction, I hope this year is positive.
Do you prefer to watch a video on this topic? Click on the embedded YouTube Video from my channel below!
