NBC Universal's announcement that it will acquire iVillage ( IVIL) comes at a time when online territory is quickly being seized by the once-sluggish big media companies. GE ( GE)-owned NBC Universal will buy iVillage for $8.50 a share, or $600 million. The transaction is expected to close in the second quarter of 2006. iVillage rose 5%. Media players have begun to make significant online purchases in an effort to shore up slipping TV audiences and capitalize on the Web advertising gold rush. They also want to find themselves on steady footing in the digital age as traditional media growth slows. In just the last year, News Corp. ( NWS) bought Myspace.com for $580 million, CBS ( CBS) has forged a number of digital deals, including one with Yahoo! ( YHOO) that saw two popular sitcoms streamed online, and Viacom ( VIA) bought teen-oriented site Neopets. For its part, Disney ( DIS) has focused on its ABC web properties and video downloads through its partnership with Apple ( AAPL). That left NBC, which hasn't exactly boasted a unified Web strategy, to ponder its next move. IVillage owns and operates Web sites that target women. They include iVillage.com, Women.com and Healthology.com. In the New York-based company NBC gets a base of 14 million unique users that's growing steadily. It also captures upscale female demographic that it can advertise to through its myriad sites and a cross-promotional vehicle for NBC and its cable TV shows and iVillage content. "This acquisition allows us to marry our on-air branded content with compelling new interactive functionality," said NBC Universal Television Group CEO Jeff Zucker in a statement, adding that the company will now be able to create a deeper, richer experience around its content for consumers across all emerging platforms. Indeed, some have been caught off guard by the speed at which quality video has surfaced and now threatens to usurp the role of traditional TV, and networks are watching ad dollars shift to the Internet at a disconcerting clip.
Interactive Advertising Bureau chief executive Greg Stuart says that this is another step along the path of "media companies looking for high-growth Internet companies." Stuart suspects that a lot of advertisers, more and more drawn to the efficiencies of the Web, are also asking for partners --- like NBC -- to up their Internet presence. In doing so, the once elusive synergies between media platforms can be exploited. NBC expects the acquisition to grow its digital revenue to $200 million in 2006 and help drive 20% growth in the future. NBC also gets something else from the deal, something its fairly disjointed web operations need: iVillage Internet competencies. NBC Universal said it expects to realize significant cost synergies by using iVillage capabilities to support existing digital operations. "iVillage immediately gives us scale and a profitable, established platform to expand our digital efforts," said Beth Comstock, president, NBC Universal Digital Media and Market Development. "This is all about creating important new intersections between community, content and commerce."