Hearst, Women.com form joint venture
The deal between the old and new media companies reflects growing competition for women surfers.
Hearst will roll its popular HomeArts site into Women.com. Each party will own 50 percent of the new venture, which will keep the name Women.com Networks. The firms are planning an initial public offering soon.
Together, they represent the highest reach among women's sites, with 4 million visitors each month as well as 6 percent of overall reach on the Web, the companies said, citing figures from Media Metrix.
Marlene McDaniel, president and chief executive of Women.com Networks, noted in a conference call today that the two companies are well matched because there is "very little audience duplication" and because they offer "complete complementary content" with HomeArts' concentration on home, food, and lifestyle and Women.com's focus on career, health, and family.
The venture will be a "destination where women can find a whole variety of things that appeal to their various interests," she said.
The deal underscores a number of trends taking place online: Content services are shoring up to become "destination" sites or hubs; companies increasingly are focusing on reaching specific markets to offer advertisers better-defined demographics; and firms are teaming up through joint ventures or acquisitions to increase brand power and offerings.
Earlier today, for example, Yahoo moved to acquire community site GeoCities in a stock deal valued at $3.56 billion to increase its reach and provide more features. Given the recent jump in Internet initial public offerings, it is no surprise that Hearst and Women.com are planning an IPO.
"With respect to going public, Women.com has been an attractive IPO candidate before this deal was announced. This merger only makes the prospects brighter, we do plan an IPO in the near future," McDaniel said. Competitor iVillage filed to go public last month.
Along with the combined features in the joint site, Women.com will gain the distribution rights for the Hearst women's magazine sites, which include Cosmopolitan, Country Living, Redbook, Town & Country, Good Housekeeping, and Harper's Bazaar. Hearst said its magazines reach 48 million women per month.
Women.com also will be promoted in Hearst's print magazines and on television through Hearst cable properties such as Lifetime, A&E, and the History Channel, the firms said. Al Sikes, president of Hearst New Media, called the venture a "terrific marriage of online and more traditional media assets."
Analyst Anya Sacharow of Jupiter Communications noted recently: "You can't underestimate the value of offline media exposure."
Moreover, research firm International Data Corporation predicted recently that 1999 would be the year for a dramatic demographic shift online, with the gender gap favoring women for the first time.
"The feminization of the Internet is a very important shift, because women seek out different Web destinations than men, spend less time surfing online, and are the primary decision-makers in the majority of household purchases," IDC analyst Frank Gens said in the report.
As for management of the venture, McDaniel will keep her roles as president and CEO as well as head up the board of directors. HomeArts general manager Kathryn Creech will be senior vice president and general manager of the HomeArts division within Women.com Networks.
The firms each will have four members on the Women.com board and said no job cuts are expected.