The two companies had agreed to a $1 billion partnership in December 1999 for domestic and international content programming, marketing and asset sharing. They sought to develop crossover products such as TV shows focusing on health, celebrity health campaigns and health columns in other media properties. In exchange for free advertising via News Corp.’s various assets, WebMD, an Internet health care services and information provider, would provide consumer health care content to News Corp.
Back to basics
But News Corp. has seen the value of its stake in WebMD plummet during the past few months. WebMD’s shares have fallen from a 52-week high of $75 to a 52-week low of $5. For its part, WebMD wants to regroup and get back to marketing its claims processing and back-end health care transactions in the b-to-b space.
The revised deal is "not a huge surprise," said Elizabeth Boehm, an analyst at Cambridge, Mass.-based Forrester Research Inc. "WebMD is focusing on the b-to-b angle whereas the News Corp. deal was a b-to-c [business-to-consumer] play. WebMD realizes it can’t be all things to all people. E-health is not dead, but parts of it, such as consumer health care content sites, don’t work."
Under a revised agreement between the two companies, WebMD will take News Corp.’s 50% stake in their international joint venture while News Corp. will take WebMD’s 50% stake in their jointly owned cable TV network, The Health Network.
In addition, WebMD said News Corp. will no longer be obliged to provide $300 million of international media services, $100 million of capital or any future capital requirements to the international joint
venture. WebMD will no longer have any financial commitments to The Health Network.