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Marchex and Fox Partner to Develop Spanish-Language Web Sites, Including Sites Newly Acquired By Marchex
SEATTLE, WA and BUENOS AIRES, ARGENTINA - May 21, 2007
Marchex, Inc. (NASDAQ: MCHX, MCHXP) and Fox's Latin American Channels division, a wholly owned subsidiary of News Corporation, today announced a partnership to jointly develop a set of Spanish-language Web sites owned by Marchex, including cocina.com (English translation is "Kitchen" or "Cook"), fotos.com (Photos), futbol.com (Soccer), deportes.com (Sports), mascotas.com (Pets), mujer.com (Woman), peliculas.com (Movies), salud.com (Health), and tarjetas.com (Greeting Cards). Through the partnership, Fox will provide localized content and community features to the Web sites including: videos, forums, blogs, personal home pages, and photo albums.
Marchex recently acquired more than 100 Spanish-language Web sites from two separate parties. The acquired Web sites collectively generated more than 1 million unique monthly visitors for the month of April 2007. Unique visitor statistics are based on internal traffic logs, which calculate unique IP (Internet protocol) addresses on an unduplicated basis during a given month. Under the terms of the transaction agreements, which are effective immediately, Marchex paid a total of $10 million in cash for all of the Web sites. Additional examples of the Web sites, which will initially be monetized with graphical and pay-per-click text advertisements, are listed below.
"Partnering with Fox, one of the global leaders in creating digital content and online communities, helps us extend our international reach to one of the fastest growing demographics of Internet users," said Peter Christothoulou, Marchex Chief Strategy Officer. "It is a key step in our ongoing strategy of acquiring Web sites and developing them into high quality destinations which, over time, will continue to build our base of global and local traffic."
"Marchex has had the vision to acquire and develop local Web sites at scale to create an increasingly valuable and growing online network," said Hernan Lopez, President, Fox Latin American Channels. "We are very pleased to work with Marchex in extending their international strategy, and believe that the unique combination of Marchex's premium Spanish-language Web sites and Fox's community-focused assets will create powerful consumer destinations."
By partnering with Fox, which operates over 50 Spanish-language Web sites, Marchex is further extending its business internationally and targeting one of the fastest growing global Internet demographics: Spanish-speaking Internet users from Spain, South America, Central America, Mexico, and the United States. According to Internet World Stats, there are more than 100 million Spanish-speaking Internet users worldwide, an increase of more than 260% since 2000, outpacing the rest of the world's usage growth by more than 25% over the same period.
Today's developments complement Marchex's broader Web site development strategy, which involves acquiring commercially relevant Web sites that have generic and descriptive characteristics, then developing the Web sites into robust online consumer destinations that provide an excellent user experience and highly targeted advertising opportunities. In June, Marchex plans to re-launch more than 100,000 of its local Web sites, utilizing its Open List content aggregation and publishing engine to populate selected Marchex Network Web sites with relevant content, including product or service descriptions, ratings, expert third-party reviews, user-generated reviews, articles, awards, maps and more.
Examples of Marchex's Spanish-Language Web Sites:
Below is a sample list of Marchex's Spanish language Web sites, including the newly acquired Web sites as well as Web sites Marchex already owned.
Newly Acquired Web Sites Examples
|Spanish Web Site||English Translation|
|Cartas.com||Cards or Letters|
|Cocina.com||Kitchen or Cook|
|Publicidad.com||Advertising or Publicity|
|Universidad.com||College or University|
Existing Web Sites Examples
|Spanish Web Site||English Translation|
|Aventuras.com||Adventures or Flings|
|Salsa.com||Sauce or Salsa|
Marchex Updated Financial Guidance:
As a result of these acquisitions, Marchex is updating its 2007 financial guidance for fiscal year 2007 (Year ending December 31, 2007) as follows:
- Revenue: Marchex does not anticipate meaningful revenue contribution from the acquired Web sites for the remainder of 2007. Currently, Marchex fees are generated under the partnership on a net revenue share basis once content feed, administrative support and other costs have been recovered. As such, Marchex is reiterating its anticipated 2007 revenue range of $144 million to $150 million.
- Adjusted operating income before amortization. Marchex anticipates the Web Sites will be amortized over periods ranging from four to seven years. Therefore, based on approximately $1 million in incremental Web Site amortization during 2007, a non-cash charge, and product investment initiatives to further develop its Spanish-language Web sites to increase their traffic and monetization levels, Marchex is updating guidance to reflect that it anticipates 2007 adjusted operating income before amortization in the range of $34 million to $38 million. However, Marchex does not anticipate any significant impact on its adjusted EBITDA for 2007 based on the transactions. For adjusted EBITDA, Marchex expects to add back approximately $7 million in additional depreciation and amortization to its range of $34 million to $38 million of adjusted operating income before amortization, compared with $6 million prior to the transactions.
About Fox Latin America Channels
Fox Latin American Channels operates channels, production, mobile and online businesses in Latin America under the following brands: Fox, FX, Fox Life, Fox Sports, Fox News, National Geographic Channel, Universal Channel, SCI FI, Util