NBC Universal Monday said it would buy iVillage Inc., an operator of a network of Web sites for women, for $600 million, marking the latest move by a major media company to use its programming foundation to tap further into growing online communities.
Rupert Murdoch’s News Corp., the media conglomerate that owns the Fox television network, last fall acquired MySpace.com, the fastest-growing social networking Internet site.
(MSNBC is a Microsoft-NBC joint venture.)
The NBC deal underscores the growth of the Internet into a bonafide alternative to television and newspapers for both programming and advertising.
Internet advertising is now the second-fastest growing sector -- after Hispanic media -- with 2006 growth expected to be 9 percent, according to research firm TNS Media Intelligence.
NBC Universal, majority-owned by General Electric Co. , will pay $8.50 per share of iVillage, a 6.5 percent premium over Friday’s Nasdaq closing price of $7.98. Shares of iVillage rose 41 cents to $8.39 in afternoon trade on Monday.
NBC Universal is betting it can deliver its television audience -- ranging from NBC’s weight-loss show “The Biggest Loser,” Bravo’s “Project Runway” and “Queer Eye For The Straight Guy” -- to iVillage’s network of sites devoted to health, beauty, style, home and parenting. The deal is expected to close in the second quarter.
“The future of media is that audiences -- and advertisers -- want their content services from the same brand across multiple platforms,” said Jupiter Research analyst David Card.
“If you look at the pure-play Internet companies with desirable audiences, some degree of traction and proven advertising sales, there aren’t that many left,” he added. ”You’ve got CNET, PlanetOut and iVillage.”
Last year, Viacom Inc. bought youth-oriented online games site Neopets and short-films site iFilm. Web search properties have also been hot, with the New York Times Co. last year buying About.com for $410 million, and IAC/InterActiveCorp. paying nearly $2 billion for Ask Jeeves.
NBC Universal’s television networks, including NBC, CNBC, MSNBC, USA, Bravo and others, will promote iVillage properties and theoretically also create a stronger set of Internet properties that the company can use to drive sales of online advertising.
“We could create these sites on our own or in development with Yahoo, but this demographic is so core to us, we thought it was important to own it,” said NBC Universal Chief Executive Bob Wright.
For example, Wright said, NBC’s “Today” show Monday broadcast a feature on child safety that could have also been run on the iVillage site as compelling online programming.
Jupiter’s Card, however, doesn’t see the obvious fit between iVillage and NBC.
“You’d think of a magazine company that already had a foothold in the women’s market,” he said. “But magazines haven’t been doing much investing online.”
NBC said it expects digital revenue to be $200 million in 2006 and to rise 20 percent going forward. IVillage revenue rose 30 percent in 2005, excluding acquisitions.
NBC expects unspecified cost savings by using iVillage’s capabilities for its own digital operations. No job cuts are expected, said Beth Comstock, NBC Universal’s president of digital media and market development.
IVillage was once a poster child of the Internet boom and bust. Launched in 1995, the company went public in 1999 at $24 a share. The shares soared as high as $100 in their first day of trading and skyrocketed to $130 a month later amid exuberance about Internet media’s prospects, but by March 2001, they had fallen as low as 38 cents.
ComScore-Media Metrix ranks iVillage the top woman’s oriented site by unique visitors in January and .41 overall. By comparison, MySpace ranks eighth over overall, with more than twice as many unique visitors as iVillage.