Sony to Take Stake in eUniverse

The electronics giant's 550 Digital Media Ventures aims to use the Web publisher to push other Sony products.

eUniverse could secure up to $17 million in equity from Sony Group’s 550 Digital Media Ventures unit, in a push to reach the Los Angeles-based Web publisher’s teen-centric audience.

550 DMV, which also owns online marketer Indimi, will purchase about $5 million in equity to the firm. In return, eUniverse will purchase email newsletter firm InfoBeat from Indimi, for about $9.94 million in eUniverse stock.

Additionally, eUniverse also will receive the option for converting a $2.1 million note to equity.

InfoBeat, which aggregates news reports and disseminates newsletters to a reported user base of about eight million, will join eUniverse’s own email newsletter services, which it says reaches more than 50 million. It is not known how much overlap exists between the two services.

In return for its part in the deal, 550 DMV will receive the ability to target eUniverse’s membership with Web site and email newsletter advertising, on behalf of other Sony Group companies. The Web publisher runs sites such as GotLaughs.com and FunOne that generally cater to male, teen and young adult audiences — among the prime markets for Sony consumer electronics.

“eUniverse has built a tremendous audience by delivering compelling online entertainment that people want to see,” said Fred Ehrlich, who is president and chief executive of 550 DMV. “With massive reach through both Web and email distribution, eUniverse has become a leader in online permission and performance marketing techniques. With the infusion of capital and the addition of the leading email service InfoBeat, we believe eUniverse will continue to be one of the winners in the online space.”

The actual amount of stock 550 DMV will buy will vary with the average closing price of eUniverse’s stock price for the next three weeks. 550 DMV also said it would “lock up” the shares it receives of Nasdaq-traded eUniverse for 1.5 years.

“550 Digital Media Ventures’ decision to become a significant shareholder and a strategic partner is a tremendous affirmation of the eUniverse business model, and speaks to the accomplishments of our management team,” said Brad Greenspan, chairman and CEO of eUniverse. “The acquisition of InfoBeat will put eUniverse above the 50 million email subscriber threshold, and will significantly broaden the offerings of our network, one of the most successful online today.”

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