NBC Forms New Venture With Xoom, Snap!

NBC Monday formed a new,
‘pure-play’ Internet
company, NBC Interactive, through a three-way deal with Snap! and community
portal Xoom.com.

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.

Executives declined to specify the companies’ financial values being
brought to the table,
saying they were all private companies.

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

MSNBC.com is not part of Monday’s
transaction executives said, and will remain a 50-50 joint venture between
NBC and Microsoft Corp.

NBC previously took a minority stake in Snap!, last June, with an option to increase its ownership position up to 60
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.”

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