NBC Universal will acquire female-focused Internet portal iVillage for $600 million in cash. NBC Universal will buy 100% of iVillage’s equity for $8.50 per share to acquire what it describes as a “profitable Internet business with proprietary content and a consistent user base that commands premium advertising.”
With the addition of iVillage, NBC Universal says its “digital revenues,” which includes delivery of content over the Internet and mobile devices and pay-per-play applications such as selling content on Apple’s iTunes online store, will grow to roughly $200 million in 2006, with a 20% projected growth rate going forward. Beth Comstock, president of NBC Universal Digital Media and Market Development, will oversee iVillage after the transaction closes, which is expected in second quarter 2006.
The company will remain located in New York. “As this transaction demonstrates, we are committed to delivering content to consumers through distribution systems both traditional and new,” says NBC Universal chairman and CEO Bob Wright.
NBC will likely first make its mark on the site by providing video content from its broadcast and cable channels, as well as from Universal. Other plans for the site include spinning it off into a digital cable network or somehow integrating it with shopping channel ShopNBC.
The site will complement the company’s news site MSNBC with lifestyle content, not all of which will come from NBC, according to GE Vice Chairman and Executive Officer/Chairman and CEO, NBC Universal Bob Wright. Wright called the acquisition a “real base” for the company, noting it was not eyeing similar sized companies to acquire.
As ad dollars increasingly shift away from TV and onto new platforms, the buy is a move from NBC to increase its stake of online property – or a “rallying cry for NBC Universal from a digital perspective,” according to NBC U’s President of Digital Media and Market Development Beth Comstock, who engineered the deal.
“It’s an acknowledgement that people are looking for content in many different places as are advertisers,” said Jeff Zucker, CEO, NBC Universal Television Group. “This takes us into a whole new ballgame and it changes the whole equation, and clearly it’s an acknowledgement that both the consumer and the advertiser is [sic] looking for a new experience. To come away from this thinking it’s just a promotional thing would be a huge mistake.”