NEW YORK (AdAge.com) -- NBC Universal has signed an agreement to buy the Web site iVillage for $600 million. The strategy is to open the women-centric village to the world at large.
|NBC Universal plans to use iVillage's 14 million strong, mostly female audience as a base to distribute its content to everyone, men and women.
NBC Universal plans to "use a base that's well-known for women as a way to start creating new, vibrant communities that go beyond women," Beth Comstock, president of NBC Universal Digital Media and Market Development, said on a conference call this morning. IVillage currently has 14 million users, the majority of whom are women.
NBC felt the time was ripe to make a purchase that could form a digital hub that could reach further than the top-rated MSNBC site could. With the merger, NBC is following other mega-media companies in a race to acquire strong Internet properties that can be used as the cornerstone of a corporate-wide digital strategy. News Corp., for instance, bought social networking site MySpace.com for $580 million last July.
The underlying plan is to marry the community engagement of iVillage with the strong content from NBC Universal TV, film and home entertainment "as a way to engage both advertisers and users," said Ms. Comstock. The acquisition "turbo-charges what we are trying to do," she added.
Jeff Zucker, CEO, NBC Universal Television Group, said no list of similar-sized acquisitions is being drawn up. "This is a real important one -- this is a base for us."
NBC Universal plans to start by streaming original video content that relates to the interest categories currently on the site, which include beauty and style, health, diet and fitness, love and sex, pregnancy and parenting, home and food, entertainment and magazines, and then expand the interest categories to widen the site's appeal. NBC will reach beyond women on iVillage by beginning with the girls and teenagers who use iVillage's Gurl.com, and to the fathers who frequent the parenting section of the site.
NBC Universal properties and other content providers will feed the site, said Ms. Comstock, with immediate plans to use existing programming like segments from "The Today Show." But NBC will also produce original content "immediately," she said. Future plans may include developing iVillage-themed shows for the digital cable space, the executives said.
Content at first will remain free and advertiser-supported, but Ms. Comstock did not completely rule out a pay-per-view model along the lines of NBC's relationship with iTunes. "It's fair to say that a good part of it will be free," said Ms. Comstock. "It's too early to tell."
IVillage's stock has been on the ultimate dot-com trip: The company went public at $24 a share in March 1999, peaked a few weeks later at $113.75 and bottomed at 50 cents in March 2001. NBC is paying $8.50 a share.
NBC is buying iVillage for a price tag (about $600 million) little different from the market cap when iVillage first went public in March 1999 ($555 million), according to Ad Age's analysis. At its peak in April 1999, iVillage had a market cap of $2.6 billion; at the bottom, iVillage was worth less than $15 million. (Calculations for market cap -- shares times stock price -- reflect that iVillage over time has increased its number of outstanding shares.)
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Bradley Johnson contributed to this report.