NBC buys IVillage:
March 7, 2006
Market Place
NBC Buys a Web Site for Women
By SAUL HANSELL
IVillage, an Internet company devoted to women, agreed yesterday to be acquired by NBC Universal for $600 million.
The sale of iVillage, one of the last major publicly traded Internet companies based in New York, comes at a time when major media companies, recovering from their misadventures online in the Internet bubble of the late 1990's, have been acquiring online companies.
Last year, the News Corporation bought MySpace, a teenage social site, and IGN, an online game site. Dow Jones bought MarketWatch, a financial news site, in late 2004. And in February 2005, The New York Times Company bought About.com, a collection of sites on specialized topics.
After those transactions, iVillage hired investment bankers and put itself up for sale. After several rounds of bidding, the final sale price, which comes to $8.50 a share, fell short of the prices bandied about by some analysts. IVillage shares rose 38 cents, or 4.8 percent, to close at $8.36.
Robert C. Wright, NBC Universal's chief executive, said that iVillage offered a way for the company to expand its exposure to the rapidly growing Internet advertising market and to connect to the coverage of women's issues and health issues that NBC already creates.
"All those areas are subjects of programs and discussions we cover on NBC," he said.
The company plans to promote iVillage on its broadcast programs and make programming from NBC Universal available on iVillage. This is a potentially awkward development because much of the NBC News content is also linked with MSNBC.com, a Web site it owns jointly with Microsoft.
Beth Comstock, the president of NBC Universal's digital media unit, said the company saw submissions by users, not content it created, as the greatest means of expansion.
"What we are excited about here is that it is a community," said Ms. Comstock. "For example, parenting. You will not only be able to read about parenting, but have message boards, photo sharing, enhanced ways of connecting with people, perhaps enhancing something that was discussed on the 'Today Show.' "
Mr. Wright said NBC Universal was not looking at buying Internet companies in other areas.
"We don't have any plans to make acquisitions at this scale, but we will look at smaller acquisitions of tools or other things that enhance the site," he said.
IVillage was started 11 years ago by Candice Carpenter, who was a consultant to America Online and became one of the most prominent figures in New York's Internet community, known as Silicon Alley. IVillage sold shares at $24 in an initial public offering in March 1999. They reached more than $100 the next day. In 2001, the company merged with Women.com, a competing site affiliated with the Hearst Corporation. After the dot-com bubble burst, the stock fell to less than $1 a share in 2002.
Hearst, which publishes a number of women's magazines, owns about 25 percent of iVillage, which it is selling to NBC.
Hearst has agreed to keep the content of its magazines on the iVillage site through the end of this year, and Mr. Wright said the companies would negotiate a future relationship. Hearst and NBC have other relationships. For example, they co-own the A&E cable networks.
NBC was an early investor in iVillage and held a board seat. But it sold its shares in 2002, a year after pulling the plug on its own highly promoted NBCi Internet portal.
Mr. Wright said NBC's efforts had been too early.
"We wish we had NBCi today," he said. But back then, he said, "NBC couldn't justify keeping the business open because the advertising was too thin."
IVillage earned $9.5 million on sales of $91 million last year. About two-thirds of its revenue came from its Web site and one-third from other companies it had acquired in areas including astrology and health-related television programs.
Jordan Rohan, an analyst with RBC Capital Markets, said iVillage had had a hard time growing as quickly as other Internet content sites, like CNet, which focuses on technology. Its natural base of advertisers, the makers of food, cosmetics and clothing, sell products that are bought largely in stores rather than directly from the Web. The acquisition may well help it grow, he said.
"NBC brings a lot to the table," Mr. Rohan said, including content and relationships with advertisers. And iVillage gives NBC an avenue for growth. "It's better than watching the NBC television audience continue to fragment," he said.
With iVillage, NBC Universal said it would have digital revenue of about $200 million this year. It expects that to grow 20 percent a year.
Douglas W. McCormick, iVillage's chief executive since 2000, has agreed to stay with the company through the completion of the acquisition. His status beyond that has not been set, he said.
nytimes.com |
