Viacom-iFilm deal cued up

Viacom International and iFilm are expected to close a merger agreement this week, according to people familiar with the matter.

Shareholders of privately held iFilm, a video-on-demand Web site, received a letter in the last week announcing the anticipated buyout by media conglomerate Viacom and seeking their approval. The deal is expected to be worth about $50 million, according to sources.

As previously reported, the proposed deal would give Viacom further exposure to a growing online advertising market. Also, it would provide an online venue to feature video content from its many traditional companies, including MTV Networks and Paramount Pictures.

Los Angeles-based iFilm, which hosts a collection of short video clips, TV show segments and movie trailers, has attracted rising numbers of Web surfers and commercial TV advertisers with the widespread adoption of broadband access to the Internet, according to the company.

Viacom, which will split into two publicly traded entities early next year, owns CBSNews.com, Neopets, MTV.com and Bet.com, among other Web properties. People familiar with the deal expect iFilm to remain under Viacom, which will be headed by Tom Freston and include MTV Networks and Paramount. A separate entity, called CBS Corp., will be led by Leslie Moonves and comprise CBS and UPN broadcast networks.

Online ad sales are expected to grow to more than $11 billion this year, up from $9 billion last year, according to research firm eMarketer. Many Internet executives and investors expect video advertising to be a big area of growth in the coming years as more people look to the Internet for entertainment.