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NBC, Snap, Xoom combine
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May 10, 1999: 1:07 p.m. ET
Stock and asset swap involving CNet to create single NBC Internet site
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NEW YORK (CNNfn) - General Electric Co. agreed to merge many of its Web assets with Xoom.com Inc., an e-commerce direct marketer, and Snap.com, an Internet service provided by CNet Inc., to create a high-profile Internet site for its NBC television unit.
The three-way stock and asset swap will result in a new company called NBC Internet, or NBCi for short, that will trade as a new security.
The resulting Web site, Snap.com, will be the world's seventh-largest site with more than 18 million unique users per month. It will include most but not all of NBC's Internet assets, the company said in a conference call Monday.
NBCi said it intends "to become a top five player on the Web." Estimated 1999 revenue for the company will be $60 million to $70 million.
NBCi is unlikely to turn a profit at its start due to heavy upfront promotion costs. It has agreed to purchase $380 million in advertising on the NBC network over the next four years. NBCi officials said that figure could be raised to $500 million during the following six years.
Though the company will be called NBCi, the brand name it will try to build on the Internet is Snap.
NBC's near-majority stake
The Peacock Network also will own 49.9 percent of the new venture and control six of NBCi's 13 board seats at the closing, expected by year's end, while Xoom.com shareholders will hold a stake of approximately one-third. NBC already has a sizable investment in Snap.com, CNet's (CNET) portal site.
As part of the agreement, NBC's stake could increase to 53 percent if it converts a debt instrument at a future date, triggering its option to hold a majority of the venture's board seats.
Bob Wright, NBC president and chief executive officer, will serve as chairman of the new company while Xoom.com (XMCM) chairman Chris Kitze will serve as its president and CEO.
NBC plans to roll its NBC.com and Videoseeker.com assets into the venture, as well as a 10 percent stake in the new CNBC.com to be launched later this summer. MSNBC.com, a general news site jointly owned by NBC and Microsoft Corp. (MSFT), is not part of the deal.
Shares of Xoom.com soared on the morning news and then drifted back slightly. But they were still up 7-3/8 to 82-1/2 in early afternoon. CNet shares skied to 127-3/4, a gain of 14. Huge General Electric barely budged, nudging up 3/4 to 110-11/16.
-- from staff and wire reports
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NBC
CNet Inc.
Xoom.com
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