NBC Universal to acquire iVillage in $600 million cash deal

By Laura Petrecca, USA TODAY
2 hours, 25 minutes ago
source: http://news.yahoo.com/s/usatoday/200...N5bnN1YmNhdA--



NBC Universal has decided that it takes a village to create a successful Web strategy.

In a bid to bolster its digital offerings and increase online ad revenue, the media giant said on Monday that it will buy the female-oriented Web network iVillage in a $600 million cash deal. NBC Universal will pay a 6.5% premium over iVillage's (IVIL) $7.98 closing price on Friday.


"We're engaged in a companywide effort to maximize our position on the Web," NBC Universal CEO Bob Wright said in a Monday morning conference call. "IVillage is a real centerpiece for that."


The Web portal, which serves up content on subjects such as health, beauty and entertainment, had 14.5 million unique visitors in January, according to ComScore Media Metrix. While the majority of those using the site are female - the average age is about 37 - NBC Universal plans to expand the brand to a mass audience.


IVillage's existing infrastructure will be the base that allows the company to "create new opportunities that go beyond women," said NBC Universal Digital Media President Beth Comstock. She says NBC Universal could attract teen girls to iVillage by sharing content from Project Runway, a TV show on its Bravo channel that features edgy fashion competitions.



NBC Universal plans to promote iVillage through its vast array of TV, film and home entertainment offerings. The overall goal is to give NBC Universal a wider platform on which to distribute its programming - and at the same time bolster iVillage's audience base. While iVillage reaches a large number of women, its audience is down 24% from January 2005, according to ComScore. IVillage says the decline is due to the discontinuation of several affiliate relationships that were not core to the company.


"More traffic means more advertising dollars," said Jeff Zucker, CEO of the NBC Universal TV Group.


With the iVillage purchase, NBC Universal expects to increase its digital revenue, much of which comes from online advertising, to about $200 million in 2006, with a 20% annual growth rate going forward. That revenue was less than $100 million in 2005.


The deal comes as traditional media companies scramble to secure an Internet foothold as consumers flock to the Web for news and entertainment.


"The Internet is the wave of the future in terms of distribution," says independent media analyst Hal Vogel.


As TV audiences decline, traditional media shops are snapping up once stand-alone Web platforms to create distribution and advertising opportunities.


NBC Universal makes the deal as its rivals are becoming more competitive in the online arena, says Jupiter Media analyst David Card, citing News Corp.'s purchase of its teen-focused social networking site MySpace.com and Disney's success with ESPN.com. "NBC has fewer big online media investments than some of the other media companies," he says.


Pending regulatory and shareholder approval, the iVillage acquisition is scheduled to close in the second quarter. Hearst Corp., which has a 25% stake in iVillage, has signed a voting agreement in support of the deal, says Hearst spokesman Paul Luthringer.


IVillage employees, including CEO Doug McCormick, will report to Comstock. Comstock says NBC Universal doesn't plan to lay off any of iVillage's approximately 275 employees. "We're in a growth mode," she said.


IVillage shares closed Monday at $8.36, up almost 5%.

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