MUMBAI: This is a time when American media companies are looking to the net as a way to grow their business further. The latest to enter the fray is media conglomerate NBC Universal will acquire online women's destination iVillage for $600 million.
By adding IVillage to its portfolio, NBC Universal is hoping to grow its digital revenue to about $200 million this year. The company projects a 20 per cent annual growth rate going forward in digital media.
With this the conglomerate is looking to strengthen its online presence as more consumers shift to the Internet for news, entertainment and shopping. NBC Universal will purchase 100 per cent of the equity of iVillage for $8.50 in cash per common share of the company for a net cost of approximately $600 million. The transaction is expected to close in the second quarter of this year pending shareholder and regulatory approvals.
Earlier News Corp had acquired myspace.com a site which allows musicians to upload their work. Earlier this year News Corp chairman and CEO Rupert Murdoch had said that the group's satellite platform Directv might spend up to $1 billion on growing the internet business.
Viacom is also planning to get into the social networking game. Speaking to attendees at an industry event in New York, Viacom CEO Tom Freston revealed the company's plans to own a social networking portal to compete with the likes of MySpace.com.
Coming back to NBC Universal's acquisition General Electric vice chairman and CEO Bob Wright says, "As this transaction demonstrates, we are committed to delivering content to consumers through distribution systems both traditional and new. Acquiring iVillage will enable us to bring our programming to a large and passionate online community. We look forward to building on the considerable brand strength iVillage has developed over the past 10 years and to giving our advertising clients new and exciting ways to reach a valuable demographic."
iVillage brings a profitable Internet business, with proprietary content and a consistent user base that commands premium advertising pricing. 2005 iVillage.com revenues were up 30 per cent year-over-year, excluding acquisitions. Additionally, NBC Universal expects to realize significant cost synergies by using iVillage capabilities to support existing digital operations.
NBC Universal digital media and market development president Beth Comstock says, "iVillage immediately gives us scale and a profitable, established platform to expand our digital efforts, especially in the rapidly growing areas of health and women's interests. This is all about creating important new intersections between community, content and commerce. We envision connecting more deeply online, on mobile and on demand with key consumers.
NBC Universal Television Group CEO Jeff Zucker says, "This acquisition allows us to marry our on-air branded content with compelling new interactive functionality. From the Today show to Project Runway to The Biggest Loser to all the health and medical and lifestyles segments we do every day on every one of our owned and operated television stations, we will now be able to create a deeper, richer experience around our content for consumers across all emerging platforms."
