Associated zooms into ISP venture

Associated Newspapers is to pay an initial £5m to acquire a 50 per cent stake in Arcadia-owned shopping portal and Internet service provider Zoom.co.uk.

The media group will then pay an additional £10m over the next five years, in a deal which will see the online venture heavily promoted by the newspaper group’s titles.

The deal effectively values the recently-launched venture at £30m.

Associated will seek to encourage print advertisers in its newspaper titles to extend their promotions online through the joint venture.

Arcadia Group chief executive John Hoerner says: “We aim to make Zoom one of the major players in the e-commerce/ISP market and the portal of choice for consumers. This partnership with Associated will help achieve this goal.”

Both Arcadia and Associated are making great play of the marketing leverage each can exert to muscle Zoom into a leading position in the UK portal and free ISP market – even though the group’s notional valuation remains dwarfed by the valuation placed on Dixons’ Free-serve venture, which formally floated this week.

Arcadia is already promoting the distribution of Zoom software on CDs in its 2,100 outlets, and is seeking to drive demand through mailings to its 5.3 million storecard holders. It expects its access to Associated’s 9 million readers will further accelerate demand for the Zoom online service.

A joint statement says: “Zoom’s ISP will benefit from advertising, promotions and editorial links across all Associated Newspapers’ leading titles such as the Daily Mail, Mail on Sunday, Metro and Evening Standard. All Associated Newspapers’ titles will adopt Zoom as their own e-commerce and free Internet service provider, with additional Zoom rooms added to the site for their readers.”

Zoom will continue to be led by chairman Robin Klein and managing director Eva Pascoe.

See {storyLink (“NMA199907290008″,”Associated Zooms in on Arcadia ISP”)} from New Media Age 29th July 1999

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