MSNBC online talks to banks to push stock offering

CNET News.com has learned that the online news service has met with investment banks to discuss plans for an IPO, but some analysts question the timing and strategy.

Jim Hu Staff Writer, CNET News.com
Jim Hu
covers home broadband services and the Net's portal giants.
Jim Hu
3 min read
Online news service MSNBC.com has met with investment banks to discuss plans for taking its Internet business public, CNET News.com has learned.

MSNBC could make a public stock offering by late spring, according to sources familiar with the plans. The company does not plan to include its cable station in the initial public offering, opting instead to focus only on the Internet side of the business, they added.

MSNBC confirmed the IPO talks but refused to discuss timing or other details. "The topic has been under discussion for some time," an MSNBC representative said. "But I do not have anything that is definite or resolved enough to discuss at this time."

An IPO could give MSNBC currency to attract and retain employees and pursue acquisitions in the fiercely competitive online news business. But some industry analysts question the timing and wisdom of the strategy.

"It seems perplexing to me that MSNBC could have the scale and product strategy to become a profitable player in the online media space," said Jordan Rohan, an analyst at Wit Capital. "News and information is available from just about every wire service and every traditional media company that has an online presence."

Others say MSNBC may benefit from its brand power as one of the first major news organizations on the Web. "MSNBC as an online site is arguably more successful than MSNBC the cable network," said David Card, an analyst at Jupiter Communications. "They've done a nice job in taking advantage of the medium."

Still, Wall Street has been unenthusiastic about Internet content companies recently. In addition, it remains unclear how a publicly traded MSNBC would work with NBC's other publicly traded online company, NBC Internet (NBCi). CNET, publisher of News.com, is an investor in NBCi.

MSNBC is a joint venture of Microsoft and NBC, a wholly owned subsidiary of General Electric. The Internet division pairs its news coverage with links to content from other NBC properties, including NBC News, CNBC and NBC Sports.

The Web site in January attracted 8.2 million unique visitors, according to Media Metrix, which measures Internet use. CNN.com, its closest general news competitor, attracted 4.7 million people in the same period.

Should the offering take place, MSNBC would join a handful of publicly traded Internet companies focused on editorial content.

Web sites such as financial news services CBS MarketWatch and TheStreet.com and women's network iVillage saw their stocks skyrocket immediately after going public. But investor interest in these stocks has become tepid. Content companies have seen significant declines in their share prices and shakeups in their management ranks.

TheStreet.com closed yesterday at $12.94, hovering near its 52-week low and a considerable distance from its high of $72.25. The company has stepped back from its subscription model since chief executive Kevin English's resignation. It also is rumored to be considering a sale or possible merger with MarketWatch.

MarketWatch, which witnessed a blazing 473.53 percent surge during its IPO, also has seen a tempering of interest in its stock. At midday today, the company was trading around $41, and shares have remained relatively flat since the new year. Earlier this week, MarketWatch president Philip Hotchkiss resigned to pursue start-up opportunities.

Online magazine Salon.com, which went public last summer, also has seen its stock decline; at noon today shares were trading below $6.

A possible spinoff carries implications for Microsoft as well, continuing the software giant's move away from direct control of content businesses. Early in its Internet efforts, the company made attempts at becoming an online media force, creating programming on its MSN Web service and developing editorial sites such as city guide Sidewalk.com and online magazine Slate.

But those efforts have stumbled. Microsoft sold Sidewalk to Ticketmaster Online-CitySearch, spun off travel site Expedia and has opted to invest in a smattering of companies instead of owning them.