New York: Comcast’s NBCUniversal invested $500 million in Snap’s initial public offering (IPO), expanding its reach into digital media by acquiring a stake in the $28 billion disappearing-photo service popular with millennials.
NBC Chief Executive Officer Steve Burke, in a memo to staff Friday, called the move a “significant milestone” in the media company’s partnership with Snap. The Comcast unit will be subject to a 12-month lockup period as part of its investment, meaning it can’t sell Snap’s shares for a year, according to a person familiar with the matter.
Snap surged 44 per cent on Thursday on their first day of trading, and gained another 12 per cent Friday.
With the latest investment, NBC has now committed over $1.5 billion to digital businesses in the last 18 months, including two separate $200 million investments in BuzzFeed, and a $200 million investment in Vox Media, the online publisher of the Verge, Eater and Recode.
Last summer, NBC produced a Snapchat channel featuring Olympic content run by BuzzFeed, which generated over two billion views, Burke said in the memo. With the Snap investment, NBC will expand its partnership with the social-media network and BuzzFeed for the 2018 Winter Games in South Korea, and launch more shows with additional NBC brands in the coming weeks, he said.
While NBC is investing heavily in digital media, the company is also scaling back its assets in traditional television. In the past two months, NBC turned one of its cable TV channels, the male-theme Esquire Network, into an online-only channel, and shut down its crime-themed cable network Cloo. NBC also owns cable networks like USA and MSNBC.
“Looking forward, we will continue to be aggressive as digital content consumption increases,” Burke said in the memo. “Investing in Snap is a key step in that direction.”
Snap raised $3.4 billion in its initial public offering, pricing the shares above the marketed range. The company sold 200 million shares for $17 each.
Snap makes the majority of its $404 million in revenue from selling advertising on its disappearing-photo app. While it’s only been monetising Snapchat for about two years, continuing the rapid clip of sales growth will be key to keeping investors happy with the $30 billion company.