NBCUniversal’s $500m Snap IPO stake worth $820m

NBCUniversal has ramped up its partnership with Snap, investing $500m in the owner of disappearing messaging app Snapchat’s initial public offering.

The Comcast-owned television group bought shares at $17 apiece this week. With shares jumping 44 per cent in their first day of trading on Thursday, and rising a further 14 per cent on Friday, NBCU’s stake is now worth more than $820m.

The stake is the latest move by the network to capture a slice of digital platforms and the younger audiences they attract, as online streaming video has pulled some viewers away from traditional TV.

Including the Snap stake, NBCU has invested more than $1.5bn in “promising digital businesses” in the past 18 months, said Steve Burke, NBCU chief executive, in a memo to employees. “We will continue to be aggressive as digital content consumption increases.”

NBCU has also invested $400m in BuzzFeed, $200m in Vox Media and acquired SportsEngine, an app for youth sports leagues.

It became a majority owner of AwesomenessTV, which makes YouTube videos, through its purchase of DreamWorks Animation last year, and owns part of Hulu, the streaming video service.

The digital expansion comes as the owner of NBC, CNBC and Bravo has trimmed its roster of TV networks. It shut its crime-themed channel Cloo earlier this month and in January turned the Esquire Network, a joint venture with Hearst, into a digital-only offering.

NBCU has partnered with Snapchat before. Last year the companies struck a deal to show video from the Rio Olympics in a BuzzFeed-branded Snapchat channel that generated more than 2bn views. NBCU and Snap are planning an “expanded partnership” for the 2018 Winter Olympics in South Korea in February.

We will continue to be aggressive as digital content consumption increases

The companies also plan to launch more shows on Snapchat using NBC brands, following successful short-form video series from its hit TV programmes including The Voice and Saturday Night Live.

Media companies have been eager to reach Snapchat’s audience of young viewers, who are spending more time watching online video on various internet-connected devices and less time with traditional “linear” television.

A recent report from Nielsen, the research company, found that 18 to 34 year olds spend 27 per cent less time watching traditional TV than people aged 35 and older.

For Snap, the partnership with NBCU comes as it, and other digital companies focused on video such as Facebook, hopes to capture some of the $70bn spent annually on TV ads.

Snap’s current business model depends on persuading advertisers to direct their marketing dollars to its offerings, which include branded “lens” filters and short video ads.

Thus far, however, the advertising world considers Snapchat an experimental format. WPP, the world’s biggest advertising group, invested $90m in advertising on Snapchat last year, compared with $5bn with Google and $1.5bn with Facebook.