Via Paid Content, here is former News Corp. COO Peter Chernin’s advice on where to focus investment in media:
In a panel discussion with Gordon Crawford, managing director of The Capital Group Companies, at the USC Annenberg School for Communication, Cherin also offered a warning—not that most investors needed it. “You stay out of the U.S., you stay out of western Europe, and you stay out of broadcast, newspapers and traditional media.” China’s media industry, despite being less affected by the global recession than the West, is no oasis, he said. Offsetting the attractive growth opportunities are massive barriers to entry. “You can pretend to do a lot of things in China, but you can’t really make money there.” He prefers other Asian countries, such as India, Indonesia and the Philippines for doing business.
Here is the webcast:
From Telegraph.co.uk
“Three supervisors who were trying to cure Deng Senshan of his compulsive computer use have been arrested after he died on Sunday.
“We are investigating a case where a high school student was beaten to death by his camp supervisors. The case is still under investigation,” a police officer in Nanning, Guangxi province, told the Chinese state media.
The boy’s father, Deng Fei, said he had paid 7,000 yuan (£605) for his son to spend a month at the Guangxi Qihuang Survival Training camp, which promised to rid the boy of his problems.
“My son was very healthy and was not a criminal. He just had an internet addiction when I left him at the camp,” he said. “We can’t believe our only son was beaten to death.”
He claimed the boy had been put in solitary confinement shortly after his arrival and then beaten by supervisors who were upset he was running too slowly.
There are several internet addiction boot camps in China, and the government has recently cautioned one hospital in the north of the country for using electro-shock therapy as part of its treatment programme.”
I want to run this man’s fan club, seriously.
There’s a saying that states: fear is temporary, greed is permanent. Well, you can add, greed is global, too.
Apparently, after losing their shirts and fleecing their own investors in the North American video market (quick, name me on more successful exit in the space other than YouTube - too late, the elevator’s moved on), VCs are now losing their shirts - and making me lose my lunch - in China, too.
Wow. No comment. The idea is: take a successful idea and export it to another market, not take a crappy idea and export it.
Question from reader…
Q: Do you think Microsoft and other investors invested in Facebook at a lower valuation than the reported $15B?
A: Yes and no.
I think MSFT invested at the $15B valuation, but then the Samwer brothers and Li Ka-shing probably managed to get their stakes at a lower valuation. However, to pull this off, the transaction had to be delicate. I am not reporting on any so-called sources or anything, just my two cents and common sense: “smart/strategic investors” always try and sometimes get discounts. I think to get into Germany and China, I could see Facebook giving someone a lower valuation… but by lower, I do not see it being less than $10B. In fact, I don’t even think the valuation per se was $10B but the same $15B. What Mark Zuckerberg should have done, if he were as shrewd as some make him out to be, is to get the Chinese and German investors agree to $15B but then get an additional 25 or 33% options if they hit certain milestones…
This way, MSFT does not feel like they are fleeced - for they too are a strategic investor - but it gives Mr. Li and the Samwer brothers an incentive to drive Facebook’s entry and penetration in China and Germany.
So to answer your question, yes and no.
One of the other arguments in the “YHOO should remain independent”camp is that Yahoo! Asian Alliance Agreement.
In essence, it argues that Yahoo! can somehow:
1- spin off Alibaba and / or Yahoo! Japan.
The problem here is that such sales would not be tax-free. The company can look into something called the Morris Trust act, but good luck there. We’ve been introduced to the Anti-Morris-Trust act to deny exactly that kind of move.
But the bigger issue is the argument they juxtapose to this strategy, which is
2 - Yahoo! should outsource search to Google.
Now that’s crazy talk. Here’s why:
Google’s ascendancy to become this mammoth online advertising juggernaut came precisely because in 2000 Yahoo! decided to use Google as its default search engine. Eventually, Yahoo! realized this was a catastrophic move and stopped that by buying Inktomi (for organic search algorithm) and Overture (for paid listings) but it was too late.
By opening up search to Google on the world’s biggest market (the US) on the world’s biggest property (Yahoo!), Yahoo! handed the world to Google on a golden platter.
Anyone who today argues that Yahoo! should hand off its search (again) to Google is essentially biting off their nose to spite their face. In other words, one of the only things that Yahoo! has going for itself is its relative (to Google) strength in Asia.
By giving up search real estate to Google in Asia - today the world’s fastest web market - Yahoo! would only show how dumb they really are. In other words, this would only make Google stronger. In fact, it is this strength that will make a MSFT/YHOO deal go through because Google is so strong that it can allow itself to underwrite such a move.
As I have said: so long as Google and Yahoo! are comparables on the stock market, Google will outperform because it is a faster growing stock with a dare-I-say-it better management.
Facebook’s CEO and founder Mark Zuckerberg is as reckless as they can get when it comes to his management of Beacon: ballsy on Madison Avenue, then apologetic on his blog, then brash again on 60 Minutes.
But when it comes to Facebook’s global strategy, Zuckerberg is quite sedate and demure. To penetrate China, instead of the go-at-it-alone strategy, he enlisted Li Ka-Shing to the tune of a $60M investment (previously it was reported that Facebook was mulling an M&A strategy in China). To penetrate Germany, the largest European web market, he is bringing on the Midas touch-wielding Samwer brothers, who incidentally started a Facebook-inspired German social networking site for students.
I think that is pretty smart. Very smart in fact.
American companies who dominate abroad are actually the exception, not the norm. In most cases, they compete for years at a high financial and opportunity cost, only to walk away somewhat wounded. In a few cases, they are nowhere to be found (Google in South Korea, for example). Generally, they do best when they partner up (Yahoo! in Alibaba, for example). Ultimately, Google is accelerating its push against Facebook so Zuckerberg et al. will have their hands full with competition locally, no need to get caught between a rock and a hard place.
On this strategy, I give major props to Zuckerberg for bringing on foreign expertise - and getting paid for it!
“We predict internet advertising to pass three milestones over the next three years,” ZenithOptimedia’s forecast said. “We expect it to overtake radio advertising in 2008; to attain a double-digit share of global advertising in 2009; and to overtake magazine advertising in 2010, with 11.5% of total ad spend.”
In 2008, Worldwide internet ad spending will climb to $44.6 billion from about $36 billion, as such, the Internet will overtake radio to become the fourth largest medium with 9.4% of global advertising share; and in 2010, it will overtake magazines to become the third largest medium with an 11.5% share.
Even TV, still the biggest and most powerful way to reach a lot of customers at once, is projected to essentially hold its ground on the global stage, taking a 37.9% slice in 2008 after getting 37.7% in 2007. Outdoor, for its part, will expand its stake to 5.7% from 5.6%, and cinema will improve to 0.5% from 0.4%.
“By 2010, China will be the fourth largest advertising market in the world and Russia will be 6th,” Jones says.
PLAY
