HSN, Others Invest $34 Million in CitySearch
CitySearch, the Pasadena firm that creates online city guides, has raised at least $34 million in new venture capital from Barry Diller’s Home Shopping Network Inc. and other investors.
HSN, of St. Petersburg, Fla., is the lead investor in the latest round of financing, which includes investment firms T. Rowe Price and Global Retail Partners, a group backed by Donaldson, Lufkin & Jenrette, Carrefour and Microsoft co-founder Paul Allen. Washington Post Co. and Schibsted, a Norwegian media company, are also among the investors.
CitySearch President and Chief Executive Charles Conn declined Tuesday to discuss the investment, which is expected to be announced on Friday.
Times Mirror Co., parent company of the Los Angeles Times, invested an undisclosed amount of money in CitySearch in June.
The new investments bring to at least $75 million the total amount that CitySearch has raised from private parties. The 1 1/2-year-old company has launched 11 online city guides (available at https://www.citysearch.com) and has 500 employees.
Analysts said they are impressed by the amount of money CitySearch has raised, especially because many of the Internet’s early shining stars have failed to live up to their financial promise.
“This is a time when funds for many content services out there have been drying up,” said Mark Mooradian, group director for consumer content at Jupiter Communications in New York. “For a content venture to land that sort of money is absolutely significant.”
CitySearch is among the leading brands in the young and crowded market for online city guides, which are accessible on the World Wide Web. The company’s main competition comes from Microsoft’s Sidewalk venture, America Online’s Digital City guides and Yahoo’s groupings of community-oriented sites.
Phone companies, newspapers, TV stations and others are also looking to break into the business. All are attracted by the prospect of earning online advertising revenue and a cut of the shopping deals that some expect to balloon on the Internet in the coming years.
HSN’s local TV stations, which reach more than 30 million U.S. households, can provide CitySearch with local content for some of its sites, said Forrester research analyst Bill Bass.
Of course, the infusion of cash will also help CitySearch fulfill its goal of expanding its network of sites from 11 to 27 by the end of next year. The capital comes at a critical time, because the online city guide industry is still in its formative stages, said Gary Arlen, president of Arlen Communications, a new media research company in Bethesda, Md.
“In this game, some leaders have to emerge quickly because the stakes are so huge and alliances will be formed around these leading players,” Arlen said.
Diller’s company has been on a spending spree. Late last month, HSN agreed to buy Universal Studio’s TV operations from Seagram Co. for more than $4 billion. Later that week, Diller offered $307.5 million in cash to buy the half of Ticketmaster--also a CitySearch partner--it doesn’t already own. Then, Monday, HSN said it would join with Univision of Los Angeles to create a Spanish Shopping Network targeting Latino consumers.
