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.”