Viacom unit MTV Networks purchased streaming video purveyor IFILM for $49 million, the latest example of media companies snapping up profitable businesses that use the Internet as a medium for online advertising sales.
The viral and user-generated nature of IFILM, which boasts over 10 million monthly users who tap into the network for short films, TV clips, and music videos and action sports, will help MTV Networks boost its online advertising inventory.
"With IFILM's strong business profile and growing traffic, we see significant opportunities for us to increase our online advertising revenue," said MTV Networks President and CEO Judy McGrath.
One of the first and most popular companies to sprout and pipe movies over the Web, IFILM features a broad assortment of programming from Hollywood studios and amateur filmmakers. The site could help MTV broaden its appeal among the coveted 19- to 34-year-old demographic.
IFILM will stay in Hollywood and will continue to be run by CEO Blair Harrison. He will report to Jason Hirschhorn, senior vice president, digital music and media, MTV Networks.
"IFILM has been a major catalyst of online viral video and allows consumers to become publishers. MTV Networks wants our audience to share the stage and program to one another," Hirschhorn said in a statement. "We look forward to growing its user base and business opportunities together."
Hirschhorn also said owning IFILM could also lead to partnerships with MTV Networks' MTV, MTV2, mtvU, Comedy Central, SpikeTV and VH1 brands.
The deal for IFILM follows MTV Networks' June $160 million purchase of Neopets, a community Web site geared toward tweens and teens, with over 100 million accounts.
More broadly, the deal will help Viacom keep pace with chief rival News Corp., which has been snapping up several online media firms. While Viacom's MTV Networks landed NeoPets, News Corp. outbid Viacom for Intermix Media Inc. and IGN Entertainment, shelling out more than $1 billion for the two profitable Net businesses.
MTV Networks' parent Viacom has been making other moves to become more effective at competing with News Corp. and Time Warner.
Last June, Viacom's board of directors approved the creation of two separate publicly traded companies through a spin-off to Viacom stockholders. The spin-off will keep the Viacom name and include MTV Networks, BET, Paramount Pictures, Paramount Home Entertainment and Famous Music.
The other company, CBS Corporation, will include CBS and UPN broadcast networks, Viacom Television Stations Group, Infinity Broadcasting, Viacom Outdoor, the CBS, Paramount and King World televisions production and syndication operations, as well as Showtime, Simon & Schuster and Paramount Parks.
The spin-off is expected to be completed in the first quarter of 2006.