Peacocks Web Spinoff Stumbles12/05/1999 7:00 PM Eastern
New York -- NBC's Internet spinoff got off to a rough
start on its first day last Tuesday, as the share price of NBC Internet Inc. (NBCi)
dropped 16 percent to $76 from its initial-public-offering price of $88.50.
The stock continued to dip, closing the following day at
When he announced the deal, NBC president Bob Wright
boasted that NBC -- the first broadcast network and the first broadcaster to offer color
and stereo -- was also the first network to form a public Internet company.
The "Peacock Network" formed NBCi with
electronic-commerce outfit XOOM.com, which experienced a stock-price run-up in the days
leading up to the spinoff. NBC owns 47.3 of NBCi, former XOOM.com shareholders own 38.8
percent and former Snap co-parent CNET owns 13.8 percent.
NBCi plans to rely on Snap as the flagship brand for the
company, which also encompasses XOOM.com, NBC.com, NBC Interactive Neighborhood,
AccessHollywood.com, VideoSeeker and a 10 percent stake in CNBC.com.
"In short, well over 80 percent of America will be
listening to or surfing on something to do with the Peacock Network," said Wright,
also the chairman of NBCi. "Turning those viewers into users and, eventually, buyers
will be our greatest opportunity in the years to come," he added, explaining how NBC
and its cable networks will promote the Internet venture.
Hoping to extend its brand to radio listeners, NBCi also
announced a three-year deal with Clear Channel Communications Inc. last Tuesday.
NBCi agreed to pay Clear Channel $20 million in exchange
for Clear Channel promoting NBCi's services on its 425 radio stations. Clear Channel
will also integrate NBCi's community and search services into the Web sites owed by
the company's 425 radio stations.
In addition, NBCi agreed to spend $405 million on
advertising on NBC and NBC's cable networks as part of the transaction to form NBCi.
The Internet company plans to pursue e-commerce by striking
deals with other e-commerce companies, but NBCi doesn't plan to enter the
distribution side of the business.
"NBCi is not getting into the business of brick and
mortar, stocking warehouses and selling and shipping goods. We're a media
company," NBCi CEO Chris Kitze said.