Peacock buys up, unplugs Net portal
Roughly 340 staffers to be pinkslipped
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Despite a recent push to promote the brand through television time on the network, the Peacock said Monday it will shutter NBCi's San Francisco offices, pinkslipping roughly 340 staffers.
Execs said it will spend the next several months deciding how to use NBCi's assets, but hinted that only a few of its ventures will be taken over by the broadcaster. The NBCi moniker will be retired.
NBC.com, which was run by NBCi, becomes the first asset to be integrated with the network. Scott Sassa, prexy of NBC's West Coast operations, will oversee it as a marketing tool to promote programming. A greater emphasis will be placed on MSNBC.com and CNBC.com.
"We will clearly be downsizing NBCi, and over the course of coming weeks we'll be sorting out which of its assets will be integrated into NBC and which of its assets will be eliminated," said NBCi CEO Will Lansing in a conference call Monday. Lansing will leave his post after a transition period.
'Economic disappointment'
The Peacock, which unabashedly calls NBCi an "economic disappointment" after investing $100 million in it and devoting more than $200 million of advertising time across its TV channels, has been exploring ways to shutter the venture for months. Division, whose execs said it would become profitable by 2002, lost $46.9 million during its most recent quarter. It had been expected to generate $100 million this year in revenues.
NBC had considered options that included liquidating the company and returning cash to investors or selling it off. NBC had been a minority shareholder in NBCi, with a 39% stake.
Under terms of the agreement, other shareholders of NBCi, including News.com parent CNET Networks, will receive $2.19 for each share of NBCi they own. Price reps a 46% bonus over NBCi's closing price of $1.50 Friday, and a considerable drop from its 52-week high of $42.87.
Move to block
But some shareholders don't approve the move, filing a lawsuit Monday to block General Electric Co.'s buyout. GE is the parent of NBC.
NBCi investors say they are being shortchanged in the buyout because company board members appointed by GE aren't pushing to get the best possible share price, NBCi shareholder Leslie Susser said in her suit filed in Delaware Chancery Court.
Susser's lawyers are asking a judge to block the buyout from proceeding while investors challenge the offer, according to court papers. Susser's suit names GE chairman-CEO Jack Welch as a defendant. Welch also serves as an NBCi board member.
Joining the club
NBC's move isn't surprising. Since January, the major broadcasters, including Fox, CBS and Disney's ABC, have handed their separate Web endeavors back to their TV counterparts, blaming a souring ad market.
NBCi was formed in late 1999, through the expensive acquisition and merger of Snap.com and Xoom.com with NBC.com. Portal was hampered, however, by a lack of communication with NBC and high-level executive shuffles and departures.
"The business model was not viable or sustainable," said Mark Begor, chief financial officer of NBC. "A sharp decline in the Internet advertising space demonstrated it didn't make sense to pursue an independent portal strategy."
