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Demand Media gains $1.2 million from new TLD “withdrawals”

Demand Media records seven figure gain from new TLD withdrawals.

Demand MediaDemand Media recorded a gain of $1.2 million last quarter from withdrawals of its interest in new top level domain name applications.

Here’s how it’s worded in the company’s 10-Q filing with the U.S. Securities and Exchange Commission:

In the three month period ended June 30, 2013, the net gain related to the withdrawals of our interest in certain gTLD applications was $1.2 million.

The company has withdrawn only one top level domain of the 26 it applied for so far: .bar. It was in a contention set with Punto 2012 Sociedad Anonima de Capital Variable for the domain name.

That withdraw wasn’t official, at least on ICANN’s website, until after the quarter ended. It’s possible this $1.2 million includes proceeds from agreeing to withdraw .bar (if it indeed struck a deal) even though it wasn’t official until Q3.

But it’s also possible that Demand Media shares in some of the revenue when partner Donuts resolves some of its contention sets.

Last quarter Donuts generated millions of dollars by losing private auctions for five strings: .club, .college, .luxury, .red, and .vote. Two of those domains, .club and .red, were applied for by subsidiaries of Covered TLD, LLC. Covered TLD is believed to be the company under which Donuts applied for domains that are part of its partnership with Demand Media.

A third possibility is that there’s some sort of other possible gain Demand Media gets through Donuts for withdrawing its own interest in a string.

Demand Media declined to comment beyond the information in the 10-Q.

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