NBC invested $500 million in Snapchat IPO as part of its ambitious investment in digital media
NBCUniversal, a unit of Comcast and parent of CNBC, invested $500 million in Snap during its IPO as part of a strategic investment and partnership, according to sources.
The stock allocation by Snap to NBCUniversal appears to be the only one made to a new strategic investor, which would make NBCUniversal the only U.S. media company with a stake. Other companies could buy shares in the open market.
The investment is the latest in a series of aggressive bets in digital media by NBCUniversal under Steve Burke, its chief executive. He has made investments in digital media assets including $400 million in Buzzfeed and $200 million in Vox. The company recently acquired SportsEngine, a digital business for youths involved in local team sports. It also bought Awesomeness TV, which has a big presence on YouTube as part of its deal for DreamWorks. In total, NBC has spent about $1.5 billion on digital assets in the past 18 months.
NBCUniversal courted Evan Spiegel, Snap's co-founder, for the past year, sources said, and both companies have been working on deepening their relationship. NBC worked with Snapchat on the Rio Olympics in partnership with BuzzFeed, which generated over 2 billion views. NBC is also producing several series on Snapchat, including "The Voice," "SNL" and E! News' "The Rundown," and more are in the works.
For Snap, the investment by NBCUniversal represents an important vote of confidence from a major media company and may help to justify to other investors Snap's $28 billion valuation. NBCUniversal agreed to hold the shares for at least a year, the sources said.
The partnership offers NBCUniversal an opportunity to create new programming using its content and brands to reach millennials, which traditional media companies and advertisers have found increasingly hard to reach on linear television. The only other major strategic investors in Snap are Alibaba and Tencent.
So far, the investment for NBCUniversal paid off: After Snap's trading debut, the stock soared 44 percent, turning the $500 million investment into about $720 million on day one.
Update: NBC confirmed the investment after this article was published.