Retreating from its hope of becoming the next Yahoo! Inc., NBC last week decided to take failed Internet portal NBCi private, blaming the soft Internet ad market for its downfall.
General Electric Co.-owned NBC, which holds 38.6 percent of the company's stock, said it would buy outstanding NBCi shares for $2.19 each — a 46 percent premium. That should cost about $86 million.
Most shareholders will take a bath: NBCi closed at $70 on the day it went public in October 1999. It broke $100 in January 2000 but closed at $2.14 last Thursday.
After laying off 150 NBCi employees in January, NBC cut half of its remaining 330 staffers last week, a spokeswoman said.
NBC chief financial officer Mark Begor stopped short of saying NBCi would be shut down, but said the portal's assets would be substantially diminished. NBC.com will be integrated into assets under West Coast operations chief Scott Sassa.
NBCi went on a buying binge amid the dot-com bubble last year, buying outfits with such names as Flyswat, GlobalBrain and AllBusiness for roughly $500 million in stock.
But as the advertising market for dot-coms collapsed, it became apparent that NBCi's business model — which relied on long-term anchor tenant deals with major advertisers — was not working.
"Other sites tied to cable have had some success," Begor said, citing CNBC.com and CNN.com. "But the broad Internet portal is not a viable business model."
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.