Media giant NBC Universal announced Monday that it will pay US$600 million to acquire iVillage, a provider of online content geared for women.
NBC Universal, which is majority owned by General Electric Co., will pay US$8.50 per share of iVillage in an effort to bolster its online presence. NBC will also use iVillage capabilities to support its existing digital operations.
The media powerhouse said that it expects the acquisition to increase its revenue from digital services to about US$200 million this year and to drive a 20 percent growth rate for the company's online efforts going forward. iVillage.com revenue was up about 30 percent in 2005 compared to the prior year, excluding acquisitions.
In the fourth quarter, ended Dec. 31, 2005, iVillage's revenue increased 65 percent to US$30.1 million, while net income rose to US$8.8 million, or US$0.12 per share, from US$2.4 million, or US$0.03 per share. IVillage expects to generate revenue between US$21.5 million and US$23.5 million in the first quarter of 2006, and between US$105 million and US$113 million for the full year.
In January, iVillage ranked 41st among the most visited Web properties in the U.S. with about 14.5 million unique visitors, reaching 8 percent of the total U.S. Internet population, according to comScore Networks.
IVillage is a "very advertising friendly property" that gives NBC Universal a significant growth platform and a desirable demographic, said Bob Wright, vice chairman and executive officer of GE and chairman and chief executive officer (CEO) of NBC Universal, in a conference call with reporters.
"This deal gives us immediate scale in the online world and we can use that to extend our digital offerings from across all of our program sites," Wright said.
NBC Universal's size and promotional power will "turbocharge" iVillage and significantly increase traffic to the site, said Doug McCormick, iVillage chairman and CEO.
NBC Universal sees big potential synergy between its television business and iVillage, said Jeff Zucker, CEO of NBC Universal Television Group. "From the TV perspective, we'll be able to go back and forth online and on the air ... in a way that suits all of our goals," Zucker said.
The NBC Universal executives praised iVillage's strong user community and broad appeal in areas such as health, style, careers, family and entertainment, and said iVillage is complementary to NBC Universal's other Web properties, such as MSNBC.com.
Pending shareholder and regulatory approvals, the deal is expected to close in the second quarter of 2006. IVillage operations will remain in New York.