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NBC Universal Buys iVillage

NBC Universal yesterday purchased iVillage, an online site devoted to women. The $600 million deal is the latest of a wave of traditional media companies lured by increasing online users and advertisers.

The sale, expected to be finalized in the second half of 2006 by regulators and shareholders, will boost the entertainment company's digital income to $200 million, according to NBC, which already owns online sites such as MSNBC.com, CNBC and Lifetime.

More than 14 million users visit iVillage, which offers information on health, beauty and entertainment.

"We're engaged in a company-wide effort to maximize our position on the Web," Bob Wright, chairman and CEO of NBC Universal, said on a webcast. "IVillage is a real centerpiece in that. They know how to create and sustain communities. We know how to create great content."

According to a recent report by Pew Internet & American Life Project, more women than men are online. Eighty-nine percent of women 18 to 29 years old use the Internet, compared to 80 percent of men in the same age group, according to the research firm.

"As this transaction demonstrates, we are committed to delivering content to consumers through distribution systems both traditional and news," said Wright, who is also General Electric's vice chairman and executive officer. NBC is 80 percent owned by General Electric.

As internetnews.com has previously reported, NBC began broadcasting episodes of "NBC Nightly News" in November. That webcast joins other video clips from "Today," "Dateline," and "Meet the Press." CBS has teamed with Yahoo to stream some of its broadcasts.

The iVillage deal is the latest in a handful of online acquisitions by traditional media firms.

In July, Rupert Murdoch's News Corp paid $580 million for Intermix Media, which operates MySpace.com, a popular online community site.

Also last year, The New York Times Company purchased About.com for $410 million. The newspaper said it would use the online property to extend its Internet reach and advertising, internetnews.com previously reported.

Combining About.com's 22 million monthly visits with the New York Times Company's 13 million users transformed it into the 12th-largest Internet property, according to Nielsen//NetRatings.

The agreement is a recognition of two trends affecting NBC's audience, according to Gartner analyst, Andrew Frank.

First, the Internet has acquired a much greater percentage of consumer attention. "Where eyeballs go, so goes media," said Frank.

The rise of broadband usage makes video, audio and other content more practical, according to the analyst. There are 30 million broadband users today with 60 million expected by 2009, according to In-Stat analyst Gerry Kaufhold.

The rush to capture online communities is "a little bit of trendiness and herd behavior," said Frank, who added that Murdoch's acquisition of Myspace.com was a "wake-up call" for many.

While community portals such as iVillage and MySpace could extend the reach of traditional media, said Frank, it isn't known whether these sites can go beyond being an additional audience to a major force.

Although the trend of traditional media expanding into online communities is growing, "it'll be quite some time before things settle down."