|NBC Universal to Buy iVillage for $600M
By PAULETTE CHU, AP Business Writer 1 hour, 22 minutes ago
NEW YORK - General Electric Co.'s NBC Universal on Monday became the latest "old media" company to make a further foray into the fast-growing world of online advertising, announcing plans to acquire women's Web site company iVillage Inc. for about $600 million.
The agreement signals an expanding strategy for NBC Universal, home to television network NBC, Universal Pictures and cable channels Bravo and USA Network. It also reflects the larger push among traditional media companies to not get left behind as more consumers shift to the Internet for news, entertainment and shopping.
"We see this as a huge growth area, but it's not mutually exclusive," Jeff Zucker, chief executive of NBC's television group, said. "The fact is that the consumer experience has to include both (the Internet and television) and this gets us both."
NBC agreed to pay $8.50 in cash for each share of iVillage, which describes itself as "the Internet for women" with sites including Astrology.com, GardenWeb.com and gURL, a Web site aimed at teenage girls.
The offer represents a 6.5 percent premium over iVillage's Friday closing price. The companies expect to close the deal in the second quarter, after getting shareholder and regulatory approval. Hearst Corp., which owns 25 percent of iVillage, has already agreed to vote in favor of the deal.
Shares of iVillage rallied 38 cents, or 4.8 percent, to close at $8.36 Monday on the Nasdaq. The stock has traded in a 52-week range of $4.65 to $8.70. Shares of GE rose 4 cents, to close at $33.10 on the
"What GE/NBC is buying here is digital capability and a portal that has strong synergy with its core female viewership," Deutsche Bank analyst Nigel Coe said in a client note.
NBC, which is 80 percent owned by General Electric Co. and 20 percent owned by Vivendi Universal, says iVillage will form the base of its longer-term strategy to meet consumers wherever they go for information. With iVillage, NBC expects to grow its digital revenue to about $200 million this year, and it is aiming for a 20 percent growth rate going forward.
New York-based iVillage more than tripled its earnings in 2005 to about $9.5 million, or 12 cents per share, on a 36 percent rise in revenue to $91 million.
In addition to merging its traditional television content, such as reality shows "Project Runway" and "The Biggest Loser," with the Internet, GE's health-care business is expected to use iVillage's parenting network as a marketing and promotional outlet.
Beth Comstock, NBC's president of digital media and market development, was among the lead supporters of the acquisition and will be in charge of the new business. The management team at iVillage, including Chairman and Chief Executive Doug McCormick, will report to Comstock.
Wall Street had widely expected an iVillage deal ever since the Financial Times reported last November that the company had hired investment bank JPMorgan Chase & Co. to "explore its options."
Other media companies have been branching out in recent years as well. Rupert Murdoch's News Corp. bought online social site MySpace, New York Times Co. acquired About.com and Dow Jones & Co. bought financial news site MarketWatch.
Analysts see the iVillage deal as a sign of yet more to come.
"The acquisition demonstrates once again the attractiveness of the content group to prospective buyers," Jefferies analyst Youssef Squali said in a client note. "We expect to see more deals in 2006, driven in part by the need of traditional media companies ... to play catch up online."