News Corp has agreed to pay $1bn for a 10.8% stake in internet healthcare portal Healtheon/WebMD Inc, the two companies announced Tuesday after the conclusion of weeks of negotiations. The announcement and the size of the deal had been widely expected for about a week.
The financial terms of the partnership call for News Corp to provide $700m in branding services worldwide over 10 years, purchase $100m of Healtheon/WebMD stock at $50 per share and invest $100m in cash in an international joint venture. In addition, News Corp has signed a $62.5m five-year licensing agreement for the syndication of WebMD’s daily broadcast content and will hand over a 50% interest in its cable Health Network and 100% ownership of thehealthnetwork.com.
The two companies say they intend to create the dominant brand in healthcare information on a worldwide scale. For News Corp, the deal represents it first major pure-play internet investment and has been perceived by some as an exploratory move. The company says the tie-up will enable it to create a multi-media, multi- revenue generating business in the trillion-dollar healthcare industry, which is said to be the largest vertical market in the world.
