Hearst Finds a Dancing Partner in Women.com

Jan 28 1999

Confirming rumors that have peppered Silicon Valley, Hearst and Women.com have announced that Hearst's HomeArts and Women.com will merge their two networks of sites.

In exchange for throwing in its Web holdings, Hearst gets half the combined company, which will be called Women.com. According to the partners, Women.com plans a public offering in the near future.

A source close to Hearst said the company had nearly negotiated a partnership with Women.com last year, but abandoned that deal to pursue competitor iVillage . The iVillage talks, in turn, abruptly fell apart in September in disagreements over the relative values of iVillage and Hearst's own HomeArts Network .

According to published reports and an executive familiar with Hearst's online operations, the earlier deals worked out with Women.com and iVillage would have Hearst merge its own HomeArts Network with the partner sites. A partnership with HomeArts would likely vault the combined network to first place among women's online magazines or destination sites, measured by audience.

In the current frantic market for Net offerings, the deal looks especially attractive for Hearst. Companies such as Ticketmaster have spun out their online subsidiaries for big profits in the stock market - a strategy that the privately-held Hearst is effectively duplicating by putting HomeArts into the new joint venture. The merged company will have market leadership in its category, making it an ideal IPO candidate.

The deal with Hearst is also a sweet balm for Women.com, which in recent months has been overshadowed by the buzz accorded to competitors iVillage and Oxygen Media. The heads of both companies - Geraldine Laybourne at Oxygen and Candice Carpenter at iVillage - have both long been media favorites. IVillage has already filed documents to offer up to $46 million of stock to the public. The offering is expected to be priced in February; a successful IPO would likely value the company at over $300 million.

Hearst has already taken equity stakes in a number of online companies including Talk City, a chat and community site, and Zip2, a network of city guides. However, the fit between Hearst's own online operations and Women.com is especially close. Women.com also brings to the table expertise in developing custom-published sites for major media partners. The Women.com network includes sites that are cobranded with Prevention magazine and Bloomberg.

The HomeArts Network currently includes material from Hearst magazines Redbook, Good Housekeeping and Cosmopolitan, but is thin on original Web content. Women.com, on the other hand, was the first of the online women's sites to launch and has substantial archives and experience developing content in areas such as finance and fitness.

One issue might be the fate of Hearst's own nascent satellite sites. Hearst already runs sites devoted to horoscopes and finance that overlap with Women.com content. MoneyMinded, the Hearst New Media women's finance site, was launched quite recently, in April 1998.

Both companies also already have a presence on America Online as well as on the Web. Hearst signed a major AOL deal in June.

One irony that is not lost on longtime observers of Women.com is that an alliance with the publisher of Good Housekeeping and Cosmo is an anathema to many of the feminist aspirations that brought early employees of Women.com to the company. Of course, aspirations are one thing, and stock options quite another.