NBC Expands Web Foothold With iVillage Acquisition

In hopes of growing its online presence, NBC Universal will purchase iVillage, which runs a network of women's sites, for $600 million. The deal, announced Monday, is expected to close in the second quarter.

"The acquisition of iVillage is a significant deal for NBC Universal," said Bob Wright, chairman and CEO of NBC Universal and vice chairman of General Electric, which co-owns NBC Universal in partnership with Vivendi Universal. "They know how to create and sustain communities," he said of iVillage. "We know how to create great content."

In a conference call with the press, Wright stressed that the acquisition will give NBC Universal immediate access to a critical mass of Web users. iVillage, founded in 1995 by Time Warner veteran Candice Carpenter and publishing executive Nancy Evans, grew to become the 41st most popular Web site in January, with 14.5 million unique visitors, according to comScore Media Metrix. (Carpenter left the company in 2000 and Evans departed in 2003.) The site is known for service-oriented offerings, especially in the health, fitness, relationship, and lifestyle spaces.

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Beth Comstock, president of digital media and market development at NBC Universal, said the company likely will offer some of its TV programs on iVillage. Jeff Zucker, CEO of NBC Universal Television Group, specifically mentioned reality shows "The Biggest Loser" and "Project Runway," as well as news program "Today Show," as examples of the types of programs that could be deepened online.

In addition, NBC intends to create original video relevant to iVillage's vertical properties. "It wouldn't be hard for us to start cranking up the video production," Comstock said.

The NBC-iVillage combination could prove very attractive to marketers, who are eager to purchase online video inventory, said Sarah Fay, president of digital marketing network Isobar US. "If NBC comes along with a bigger online presence and property and place to drive people, and says, 'We're going to put all of our past issues of shows and cancelled shows here, and make a library out of it,'--there'd be a line of advertisers out the door waiting for that to happen," she said.

In addition, the potential to mesh TV shows with Web content--for instance, linking or otherwise promoting video footage from "The Biggest Loser" with iVillage's weight-loss advice--provides advertisers with built-in avenues for extending campaigns online. "It gives you the opportunity to add impact to your buy, in addition to reach," Fay said. "Smart marketers today are looking for ways to create bridges between the TV and the online experience," she added.

In recent months, NBC has made other stabs at extending its TV content online. The NBCOlympics.com site offered visitors video clips of the Torino competitions, in addition to slide shows, articles, blogs, and other Web-only content. That site grew to become the 116th most popular Web destination, according to research company Hitwise.

Ironically, as NBC moves toward creating online content, Internet company Yahoo--the most popular Web site, according to comScore--is backing away from plans to create TV-type programming for the Web. Last week, Yahoo Media Group head Lloyd Braun told The New York Times that Yahoo would concentrate more on consumer-generated media than developing new online shows. "I didn't fully appreciate what success in this medium is really going to look like," he told the Times. "This is not about creating one-off hits like in my old business," said Braun, the former chairman of ABC Entertainment.

With the iVillage deal, NBC joins the ranks of traditional media companies that have recently purchased Web companies. Last summer, News Corporation purchased Intermix, parent company of MySpace, for $580 million, and also bought game network IGN Entertainment for $650 million. The New York Times Co. last year purchased About.com for $410 million, and Viacom bought Neopets for $160 million and iFilm for around $50 million.

The iVillage purchase price of $600 million, or $8.50 a share, reflects a 6.5 percent premium over Friday's stock price. iVillage reported 2005 revenues of $91.1 million, marking a 35 percent increase from 2004. NBC said it anticipates $200 million in digital revenue this year.

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