NBC Forms New Venture With Xoom, Snap!
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NBC said the merger creates the first publicly traded Internet company integrated with a major broadcaster, resulting in the seventh-largest Internet site.
Once the merger is finalized, NBC will own a 49.9 percent stake in NBCi and will name directors to six of the 13 board seats. NBC will also purchase a convertible debt instrument which, if converted at a future date, could result in additional ownership of NBCi and the ability to name a majority of the board.
Assuming conversion of the debt instrument, NBC would own a 53 percent stake, CNET and Snap.com option holders would own a 13 percent stake, XOOM.com shareholders and its option holders would own a 34 percent stake. The deal is expected to close by the end of the year, pending shareholder approval.
NBC President and Chief Executive Officer Bob Wright will become chairman of NBCi's board. Xoom.com Chairman Chris Kitze will become president and chief executive officer of NBCi.
The new company will use Snap! as its consumer brand, incorporating broadcast, portal, and e-commerce for more than 18 million unique users per month. NBCi's properties will include NBC's Interactive Neighborhood and Videoseeker.com. It will also have a 10 percent stake in the new version of CNBC.com, to be launched this summer.
NBCi will also offer content, including full motion video programming, original extensions of NBC shows, including sites for "Saturday Night Live" and "The Tonight Show with Jay Leno," and localized community guides connected to local NBC stations. NBCi will be supported by transaction and advertising revenues.
NBCi will receive $380 million in advertising on NBC over the next four years and an additional $500 million in advertising over the following six years.
NBC previously took a minority stake in Snap!, last June, with an option to increase its ownership position up to 60 percent. NBC also purchased 4.99 percent of CNET common stock for $26 million.
At that time, NBC announced it has set aside $38 million for an eventual 60 percent stake, and acquired 19 percent ownership of Snap! for part of that sum.
Since NBC's investment the company said Snap! has surged in Internet property rankings from 43rd to 11th place, with 9.75 million unique visitors per month, based on results from traffic measurement firm Media Metrix.
Xoom currently claims more than 7.3 million members in its portal. NBC executives appearing on CNBC said today's transaction will leverage Xoom's member base into a wide array of e-commerce initiatives.
In a separate announcement today, CNET and NBC said they plan to produce a new weekly television technology program to air on CNBC. The one-hour program will air on Saturdays and Sundays from 4:00 to 5:00 PM EST beginning in October.
"This merger will result in an exciting company for investors and consumers alike. It creates a unique public company, NBCi, which will be NBCs exclusive general Internet portal, and through the integration of all these Internet properties provide a major new all-purpose site, that is exceptionally well-positioned for the broadband world to come," said Tom Rogers, president NBC Cable and executive vice president, NBC.
"When we started Snap.com two years ago, never in our wildest dreams could we have imagined that it would work out so well," said Halsey Minor, CNET's chief executive officer. "As investors, we are very encouraged by the promotional might behind NBCi and the outstanding growth potential for Snap.com."