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Murdoch buys into WebMD
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December 7, 1999: 4:02 p.m. ET
News Corp. to take 10.8% stake in online health care company
By Staff Writer Martha Slud
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NEW YORK (CNNfn) - News Corp., the media group controlled by Rupert Murdoch, agreed Tuesday to buy a minority stake in Healtheon/WebMD Corp. for $100 million and will invest hundreds of millions more in advertising and promotion for the fast-growing medical Web site.
Under the deal -- which reflects traditional media companies’ attempts to gain an edge on the Internet and the growing popularity of consumer health information online -- News Corp. will pay $50 a share for a 10.8 percent stake in the newly merged online health care company. (CNN.com has a content partnership with WebMD and a small equity stake in the firm.)
Healtheon stock traded up 7/8 at 46-3/8 Tuesday afternoon, down from earlier session highs. News Corp. shares slipped 5/16 to 38-1/2.
"We think this is a real bellwether day for us and frankly for media-Internet combinations,” Peter Chernin, News Corp. president and chief operating officer, said to reporters during a conference call announcing the deal.
Sydney, Australia-based News Corp., (NWS) will spend about $700 million in advertising for Healtheon/WebMD (HLTH) over 10 years and invest $100 million cash in an international joint venture with the company. News Corp. also will pay $62.5 million to use content from the WebMD health information Web site in its own programming.
Chernin said News Corp. may use content from WebMD, which runs a popular health information Web site for consumers, on its Fox TV news broadcasts, to develop a special health-oriented television show with Healtheon/WebMD for the network and to leverage the WebMD brand name in health books published by its HarperCollins unit.
The pact also calls for Healtheon/WebMD to receive a 50 percent interest in News Corp.’s Health Network on cable television and total ownership of thehealthnetwork.com.
Media analyst Christopher Dixon of PaineWebber said the deal was a good move for News Corp.
"This is really the next step in developing their dot-com strategy - health is clearly going to be one of those important vertical categories.”
For Healtheon/WebMD, the deal helps boost its brand name - a main goal of the company’s executives, said Stephen DeNelsky, an analyst who covers "e-health” companies for Credit Suisse First Boston.
"What they have done is captured the attention of investors and rightly so,” he said. "They’re the most aggressive in terms of making deals, and the deals are not small ones.”
Healtheon/WebMD’s competitors for the consumer health information market include drkoop.com (KOOP), a site named for former Surgeon General C. Everett Koop, and Medscape.com (MSCP), which is 35 percent owned by CBS Corp. (CBS).
Healtheon, founded by Internet entrepreneur Jim Clark, focuses on putting billing and other back-end medical office work on the Internet. It merged with WebMD to create an online network that also would target the consumer market.
Healtheon and News Corp., the majority owner of the Fox Entertainment Group (FOX), first announced in October that they were discussing a deal.
In mid-November, Healtheon and WebMD completed their all-stock merger, which originally was valued at about $7.9 billion when announced in May as Healtheon stock soared to about $126 per share. The deal was worth about $4.7 billion when it closed.
Healtheon also closed on two other purchases last month; medical claims processor MedE America and health news service Medcast, for a total of about $632 million.
Banc of America Tuesday raised its stock rating on Healtheon/WebMD to a "buy,” up from a "market performer.” 
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