BUSINESS BLOGS
BUSINESS BLOGS
category: business
12 Jan 2009

When CBS hired Quincy Smith to head up its online efforts, the former Netscape dealmaker and Allen & Co. investment banker joked that CBS’ efforts at building a video destination called Innertube might have been called CBS.com/NoOneComesHere.

Lacking much presence online (as in, it was not in the Top 10 properties) it then embroached a “distribution over destination strategy”, launching the CBS Interactive Network.  Indeed, with online video it is possible to build distribution on third party sites (as we’ve done quite well) but near impossible to build a destination without considerable investment.

Then, of course, it bought CNET for $1.8B - something that we called a couple of months before the deal was announced.

While the meltdown in media stocks (and all assets, in fact) might make that deal seem foolish in the present - even CEO head honcho Les Moonves said he might not pull the trigger on that deal if he knew how much equity prices would tumble and ad market would slow down - long term it will prove to be a decent buy, as it catapulted the Tiffany network into the Top 10 rankings of largest Web properties (Last.fm, the other $100M+ deal it did also helped, of course).  Another reason why it was a savvy deal was the portfolio of URLs that over time should prove accretive, too.

With the Web 2.0 era firmly a bust, you will see the merits of a 1.0 notion - the portal - return.  As such, with the large Web audience under its wings, today we get confirmation that CBS will toss its hat in the ring by relaunching TV.com and take on (though the corporate spin might very well be that they’re not competitors, etc.) Hulu, Joost, Sling.com, etc…  while success in these endeavors is anything but certain, if CBS can leverage its content to build something of value and hatch a successful destination at TV.com, then it might make everything else it got in the CNET deal the cherry on the sundae.  After all, it has been reported that Hulu.com might generate more revenue in 2009 than Google’s $1.65B pet project YouTube will…

TV.com’s success is anything but guaranteed, but this does seem to prove a nice lesson: with the right content, you can always catch up on distribution and build a destination yourself… but without the right content, you’re dead on arrival.  Of course, it helps to make one key acquisition, regardless of its form.

Disclaimer: Joost, YouTube, Hulu, Sling are all WatchMojo.com’s distribution partners.