polo beach towel NBC helps Ralph Lauren fulfill a multimedia dream
RALPH LAUREN, the pre eminent peddler of aspirational clothes and other merchandise, has dreams, too. He wants to have a multimedia presence like Martha Stewart, the omnipresent home guru.Yesterday, NBC and its Internet affiliates signed on with his dream. They joined with Polo Ralph Lauren in a new media company that will promote the designer’s products online and on the air. The deal, while a coup for Mr. Lauren, will further blur the line between content and commerce at traditional media companies. Stewart’s Web site, but for the ponied set. The idea is that consumers will go to the site to experience Mr. Lauren’s luxurious romantic version of a safari or the American West through video clips, and that they will then buy the related Polo products, as well as non Polo related services like airline or hotel reservations. Eventually, the company, RL Media, might develop magazines or even TV programming for NBC.Numerous media companies have tried to leverage their advertising power for stakes in the Internet field. The CBS Corporation, a unit of Viacom, has traded airtime for part ownership in some 19 Internet businesses, including a health site and a portal that gives away cash. And USA Networks signed a deal last week that will enable it to sell National Basketball Association products and services on its electronic commerce units, which include the Home Shopping Network and Ticketmaster Online CitySearch.In the Ralph Lauren announcement, analysts saw further signs that the networks were preparing to profit from a time when viewers want not just to watch TV programs, but to shop from them as well. (Hey, who made that leather thong Jennifer Aniston is wearing and how much does it cost, anyway?) ”This is an enormous step toward turning what’s currently known as a television set into an interactive appliance,” said David Verklin, chief executive of Carat North America in New York, part of the Aegis Group, a media agency.Under the terms of the 30 year joint venture, NBC and associated companies will foot much of the bill (most of it in advertising) for start up expenses, in return for 50 percent of the company. The network is committed to providing $100 million in advertising time over the next five years; NBCi,
an online holding company 47 percent owned by NBC, will offer $40 million in online promotions, and CNBC has committed $10 million in advertising time.ValueVision, which is 40 percent owned by NBC, and operates Home Shopping Network, No. 3 in TV shopping, will put up about $50 million in cash.Mr. Lauren will build the multimedia empire he has long coveted for a relatively small sum.Newsletter Sign UpIn return, he will retain 50 percent ownership and total creative control of the site in fact his son, David Lauren, will be creative director. When and if sales from the site exceed $75 million, Polo Ralph Lauren will begin to receive a portion of sales. From $75 million to $200 million, it will get 10 percent of revenue, and it will get an undisclosed portion of sales above that level. In addition, Mr.In an interview, Mr. Lauren was vague about the content but ecstatic about the potential. ”We don’t know all the things that are going to happen,” said the designer, who even ventured that he had a few thoughts about situation comedies, ”but this is about integrating into the world of technology and new media.”The partnership also gives a nice kick to Polo Ralph Lauren’s stock, mired like those of many apparel companies and trading at a record low before the announcement. Shares of Polo rose $1.75 yesterday to close at $16.25.It is less apparent what NBC and its associated companies hope to get from the deal, beyond a stake in a company that could have a hot public stock offering. NBC executives seem eager to develop a future for the network where content and commerce commingle more easily. ”Instead of merely aggregating a great audience and letting other people sell to them,” said James Schwab, a senior vice president for interactive services at NBC, ”now we are going to sell things ourselves.”Ralph Lauren was advised by Robert S. Wiesenthal, head of digital media at Credit Suisse First Boston, who helped broker the deal.Correction: February 14, 2000, Monday The advertising column on Tuesday, about the formation of a media company by NBC and Polo Ralph Lauren to promote Polo’s products online and on the air, misidentified the home shopping service owned by ValueVision International. It is SnapTV,
not the Home Shopping Network.