Viacom's MTV Networks unit took a further step to broaden its Internet exposure, announcing that it has taken over privately-held online video destination iFilm Corp. for $49 million.


NEW YORK (The Hollywood Reporter) -- Viacom's MTV Networks unit took a further step to broaden its Internet exposure, announcing that it has taken over privately-held online video destination iFilm Corp. for $49 million.

Hollywood-based iFilm has earned a reputation as a buzz-builder, with its more than 10 million users per month and the delivery of more than 30 million streams per month. It says it features the largest library of short-form entertainment video content on the Web, with programming coming from Hollywood studios, amateur filmmakers and user-generated content. Among the site's content are movie trailers, video clips, TV show clips, videogame trailers and more.

The deal will allow MTV Networks and Viacom to get further access to the fast-growing online advertising market and give its content businesses, including Paramount Pictures, a chance to potentially develop creative and talent featured on iFilm. The Web site, on the other hand, will get easier access to Viacom's libraries of content.

Once Viacom splits into two entities, a move expected to be completed early next year, the Tom Freston-led Viacom -- the Leslie Moonves-led CBS Corp. makes up the other part -- will control iFilm.

IFilm will continue to be run by CEO Blair Harrison out of Hollywood, in line with Viacom's vision of operating online acquisitions as independent brands. Harrison will report to Jason Hirschhorn, senior VP digital music and media, MTV Networks.

After online murmurs about the iFilm deal in recent weeks, MTV Networks made things official on Oct. 13. The transaction comes as a follow-up to its recent purchase of online youth community Neopets for $160 million.

"This move is at the heart of MTV Networks' multi-platform strategy," MTV Networks chairman/CEO Judy McGrath said. "With iFilm's strong business profile and growing traffic, we see significant opportunities for us to increase our online advertising revenue."

Hirschhorn added that MTV Networks is "excited about the partnership potential with our established brands, like MTV, MTV2, mtvU, Comedy Central, SpikeTV and VH1."

IFilm's investors have included Sony Pictures Entertainment, Cablevision Systems' Rainbow Media, Paul Allen's Vulcan Ventures, Axiom Ventures, the Eastman Kodak and Liberty Digital.

Late last year, VNU Inc., the parent company of The Hollywood Reporter, acquired the publishing division of iFilm, including the Hollywood Creative Directory and Lone Eagle Publishing.

In a telephone interview on Oct. 13, Harrison and Hirschhorn said the two sides make a strong fit.

"We want to be all we can be," Harrison said. "We want to be a household name. With Viacom's financial muscle and libraries of content, we can leapfrog everyone else."

While the two executives had no immediate projects to share, Hirschhorn said short-form or piecemeal content could soon transfer from iFilm to MTV Networks channels. "And if talent stands out [on iFilm], sure there is an opportunity" to come to Viacom TV or film projects, he added.

Hirschhorn said "free ad-supported video is the big Web opportunity right now," and MTV Networks will help further grow iFilm's traffic via cross-promotion on other company sites and cable networks.

Besides traffic and advertising, Hirschhorn mentioned paid-for video-on-demand and subscription VOD as possible growth drivers of the business over time. Asked about Apple Computer's new video iPod, he didn't rule it out as a potential future partner for iFilm.

Hirschhorn emphasized that "Blair will have editorial control," which will mean that Viacom content will get no automatic preferential treatment by iFilm. "Our audience has always voted with their feet," added Harrison.

The two executives declined to say whether iFilm has made a profit so far. But Hirschhorn emphasized that "we are in this business to make money."