News Corp. and Healtheon/Web MD Forge $1B Partnership

Australian media giant News Corp. (NYSE: NWS) and Internet healthcare company Healtheon/Web MD (Nasdaq: HLTH) announced today that they have joined forces in a $1 billion (US$) partnership.

The two companies plan to utilize one another to produce unique online and offline programming and give it a global reach unsurpassed in the industry.

Under the terms of the deal , News Corp. will receive a 10.8 percent stake in Healtheon/WebMD in exchange for providing $700 million in branding services over 10 years, a $100 million cash investment in an international joint venture, a $100 million purchase of Healtheon/Web MD stock, a $62.5 million licensing agreement for syndication of daily broadcasts, a 50 percent interest in the Health Network, and 100 percent ownership of the healthnetwork.com.

"This global partnership represents a powerful convergence of the largest international media company with the most powerful electronic brand in the healthcare market," said News Corp. CEO Rupert Murdoch. "Today, we announced an ideal partnership to help us achieve our goal of establishing a multi-media, multi-revenue generating business in the trillion-dollar healthcare industry."

Swapping Content, Expertise

The partnership calls for a number of pioneering cross-promotional efforts. One significant initiative calls for Healtheon/Web MD to rely on a staff of 100 full-time medical experts in providing healthcare content that will be used across all of the News Corp's media properties. These properties include Fox Television, the British Sky Broadcasting network, the New York Post and dozens of other newspapers in Britain and Australia.

The companies say the partnership could produce new cable shows dedicated to healthcare issues and a variety of initiatives that will air on News Corp's affiliate stations. The two will jointly run Fox's Health Network, which has 14 million subscribers and Healtheon/Web MD will assume control of the Web site dedicated to the network.

Model Marriage

If the partnership produces anywhere near the synergy the companies touted in its statements today, it could well prove to be a model for a marriage between traditional media and the Internet. Murdoch is obviously intent upon getting into the healthcare industry and Healtheon/Web MD views the News Corp. as a springboard to establishing a global reach.

To that end, the companies also said that the planned international joint venture would aim to replicate Healtheon/WebMD's success in the U.S. market. It will be armed with $100 million in cash and $300 million in branding services.