Dr. Drew Flies the Koop

In the M&A landscape, here’s a true match made in heaven. Drkoop.com
announced plans to acquire drDrew.com for 1.58 million shares of
common stock and roughly $150,000 in cash. Based on drkoop.com’s buck-o-five share price, the
deal is tentatively worth about $1.5 million. The going-out-of-business
sale officially marks the end of the ex-MTV pop-psychologist’s attempt to
pan for Net gold, while flushing a fistful of venture capital money down
the commode.


Sherwood Partners, an advisory firm
that specializes in working with struggling start-ups in search of
“exploring strategic alternatives,” handled the clean-up duties. In a
nutshell, the company pawned drDrew.com for the trifling sum of $150,000 in
cash, because as we all know, drkoop.com won’t be around in a year to make
good on the million plus shares worth of restricted stock.


Out-of-favor Palo Alto-based Garage.com
was the first incubator to throw money at the idea of Dr. Drew Pinsky
taking his wacky sideshow on the Web. Softbank followed suit with an $8
million second round of funding late last year. Since that time, the
enthusiasm from investors toward online health-related content Web sites
has completely evaporated. To make matters worse, MTV put Dr. Drew’s
raunchy sex-advice show Loveline out to pasture earlier this year,
making the namesake less of a draw.


Dr. Drew managed to extend his fifteen minutes with a handful of
appearances on CBS’ high-profile bomb, Big Brother, but the guest
spots by the resident shrink just screamed sell-out. Fortunately,
the good doctor can always fall back on his regular gig as the co-host of a
rather entertaining late-night radio show cut from the same Loveline
cloth, minus much of the cheap “pull my finger” humor of its TV cousin,
that’s been nationally syndicated since the early 80s. But like many failed
dot-com celeb ventures that came before him, Drew Pinsky was better off
keeping his day job.


While Dr. Drew busies himself trying to restore some respectability to his
image, drkoop will inherit the same revenue riddle the previous owner
grappled with. Namely – how to monetize those Gen-Y eyeballs. Former
drDrew.com CEO, Curtis Giesen, surveyed his audience this summer to test
whether readers would be willing to pay for content on the health Web site.
Plans were in the works to roll out a pay-for-view service that would
charge users somewhere in the neighborhood of $50 per month, but the idea
was ultimately shelved.


What’s more pressing for a publicly-trade company like drkoop.com is
whether this latest land-grab increases shareholder value. If I didn’t know
better, I’d think the management was mistakenly under the impression that
Dr. Drew’s celebrity was at its peak, rather than riding off into the
sunset. What’s more, content doesn’t come cheap, despite drkoop’s assertion
that it will continue running drDrew.com “with minimal additional expense.”
Which may be why investors gave this deal a collective yawn, boosting
shares by a paltry $0.03 on the news.


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