NBC Universal is spending about $600 million to get in touch with its inner woman.
When it announced Monday that it would acquire IVillage Inc., an independently owned operator of websites that target women, the General Electric Co. unit became the latest old-media conglomerate to embrace the fast-growing social networking capabilities of the Internet. Its goal: tapping into the rapidly expanding Internet advertising market, which last year totaled $12.5 billion.
In a conference call with reporters, NBC Universal Chairman Bob Wright called IVillage, which explores such themes as health, beauty, dieting, pregnancy and parenting, "a very advertiser-friendly property." He said the site was attractive because it had a dedicated fan base of about 14 million users a month and was profitable.
Last year, Rupert Murdoch's News Corp. paid $580 million to buy MySpace.com, a popular site among teenagers. Viacom Inc. spent more than $200 million for the virtual pet site Neopets.com and the short-film website IFilm.com. In addition to advertising revenues, the media giants were drawn by the ability to promote their properties to a ready-made community of online users.
"This is the shape of things to come," said Allen Weiner, an analyst with Gartner Inc. "You're going to see all of these big media companies line up to be part of these social communities. They can't get into that market quick enough."
NBC Universal plans to acquire IVillage's outstanding stock for $8.50 a share in cash, a slight premium over Friday's closing price of $7.98 a share. The stock jumped 38 cents to $8.36 on Monday.
The transaction is expected to close during the second quarter after receiving approvals from shareholders and regulators. IVillage's largest shareholder, Hearst Communications Inc., which owns 25%, has signed off on the deal.
By adding IVillage to its portfolio, NBC Universal said it hoped to grow its digital revenue to about $200 million this year. The company projects a 20% annual growth rate going forward in digital media.
"IVillage matches well with our digital strategy.... It turbo charges what we are trying to do," said Beth Comstock, NBC Universal's president of digital media and market development.
Comstock was GE's chief marketing officer until January, when she returned to NBC with a mandate to increase its presence in digital media, an initiative that the company views as key.
