Demand Media Files for IPO

(Reuters)- Online content provider Demand Media Inc filed with U.S. securities regulators on Friday to raise up to $125 million in an initial public offering of its common stock.

The company relies on more than 10,000 freelance contributors to churn out content on topics ranging from becoming a better photographer to making small talk. It generates revenue mainly through advertising.

Demand Media said in a regulatory preliminary prospectus that it reported revenue of $198 million in 2009 and $114 million for the six months ended June 30, 2010.

The company said that 18 percent of its revenue in 2009 and 26 percent of its revenue in 2010 was derived from advertising arrangements with Google (GOOG.O).

Demand Media is one of a handful of Internet companies that produces a trove of information for little money.

Several traditional media outlets such as Gannett Co’s (GCI.N) USA Today, use some of Demand Media’s content to supplement their own material.

Yahoo Inc (YHOO.O) recently bought Demand Media competitor Associated Content and AOL Inc (AOL.N) is trying to transform itself into an online media company that relies on a mix of professionally produced articles and videos and low cost content from contributors.

Demand Media, based in Santa Monica, California, said in the filing that it intends to use proceeds from the offering for general corporate purposes and to acquire or invest in complementary technologies, solutions or businesses. Goldman Sachs and Morgan Stanley, among others, are underwriting the IPO. (Reporting by Abhinav Sharma in Bangalore and Jennifer Saba in New York; Editing by Roshni Menon)

peHUB Note: Demand Media backers include 3i, Goldman Sachs, Generation Capital Partners, Oak Investment Partners and Spectrum Equity Investors.