I finished reading Kenneth Whyte’s The Uncrowned King on William Randolph Hearst, and I learned a lot about how to be a better businessman and entrepreneur, no doubt. Hearst was the man, for sure.
But I also walk away now realizing that newspapers as (we know them) will die, no matter how much of a fight they put up.
From the last pages of the book:
“The 20th century brought an extended (and ongoing) era of profit-taking and consolidation. Advertising came to dwarf circulation as a source of newspaper revenue, and advertisers found it more cost-effective to reach a whole reading public with one or two ad placements than with many.
The big papers got richer, the smaller ones disappeared, to the point where many metropolitan dailies enjoyed local monopolies. With reduced competition, newspapers lowered their voices and brought in their elbows.
The aggressive, crusading, politically charged, self-promoting, polarizing, audience building antics of the old warrior owner-editors gave way to to the relatively bland consensual habits of the business manager who wanted only as many readers as would keep his advertisers happy.”
What is the problem? There are two.
- The Web has cut into their audiences, and
- advertising is more effective online…
The Web will keep eating away at newspaper audiences and revenues, and if/when newspapers get serious about moving to the Web, then they accelerate their inevitable demise.
In the 1950s, television ushered in even greater reach, so the appeal of placing ads in most newspapers vanished. I think the papers who did not die when the penny presses merged and subsequently closed in the 1950s will probably go out of business by first merging and then selling this time around.
In the 2000s, the Web offered more by way of local tastes. The myth that newspapers “master” local content is a myth. They’re not bad at it, but they took advantage of an inefficiency. The Web leveled the playing field and made marketing more efficient. This fundamentally pierces through any vestige newspapers had.
Newspapers will die, news will go on… News companies have a choice to make.
While 2008 finished off with companies doing their best to cling on to anything to avoid from being sucked into the maelstrom, I think - despite the continued stock market meltdown - that many companies are seeing some stabilization in their core business. In other words: yes, 2008 Q4 saw a rapid evaporation of booked business, but 2009 is not looking as dire as some expected.
Online Remains a Beacon of Growth
Let’s face it: online media remains a growth area regardless of the fact that growth targets have been reduced. If you are CBS, News Corp., GE’s NBC, Walt Disney, Viacom or Time Warner, you have to look at ways to spruce up your online assets and acquire new ones. If you are Yahoo!, Microsoft, Google, Amazon, Apple, Cisco, Comcast, or IAC, you are looking at online assets as more reasonably priced relative to the previous couple of years.
A couple of companies that remain wild cards are print-based media firms Conde Nast and Hearst, who unlike their newspaper brethren (Tribune, NYT, etc.) are not on the verge of banktrupcy, but whom might fare a similar fate if they don’t take action soon.
This, I believe, is what explains the latest report by JP Morgan analyst Imran Kahn, who (Via Paid Content) in a new report, says:
“Mergers and acquisitions among internet companies could grow significantly. Since most companies cannot look to the economy for growth (JP Morgan estimates GDP will decline 2.2 percent this), Kahn believes healthier internet companies will turn to acquisitions, and that they will target inexpensive smaller internet companies.
Small is Beautiful
I’ve mentioned for some time that microdeals are the wave of the future:
- companies just don’t have the financial wherewithal to go for grand slam deals, and
- integration becomes a nightmare.
Lowered Expectations
Where things get interesting for big media companies is that VCs have been blindsided by their own investors inability to meet capital requirements, so many will accept lesser exits… though truthfully, heavily-funded VC companies are going to get sidelined in the M&A song-and-dance because entrepreneurs might be more realistic whereas VCs will never be able to pull their investments “in the money” when they agreed to nosebleed valuations for some of these bubbly Web 2.0 fares (Digg, Slide, Facebook, Ning, etc.).
Kahn seems to agree:
“Kahn believes healthier internet companies will turn to acquisitions, and that they will target inexpensive smaller internet companies.”
Build vs. Buy
The other variable we’ve touched on Big Media’s Buy vs. Build dilemma for some time:
Large internet companies may re-consider the “build vs. buy” strategy—they’ve been moving recently toward the “build” side of that continuum, which resulted in only 45 acquisitions in 2008 versus 94 in 2007, according to Kahn. While he predicts large internet companies will still increase their R&D spending by 8 percent in 2009, that is much less than the 25 percent increase in 2008. As they spend less on innovation internally, large internet companies will probably be on the hunt for smaller companies.
Balance Sheet vs. Income Statement
This plays into the nuance between balance sheets and income statements. A company’s income statement captures the revenues and costs over a period. Right now: revenues are going down (or at best flat) whereas costs remain high. Yet companies do have cash on their balance sheet, which captures a firm’s assets and liabilities (and shareholder equity) at a given time. In other words, even if companies revenues go down, their cash remains idle. But if revenues are flat or going down, a company cannot justify adding to costs (and thus “building” in house) because this will push the company into a money-losing status, which in a tightening credit market might mean lights out if the company’s financing and credit facilities dry up.
As a result, while cash is king, too much cash on a balance sheet is inefficient.
“Finally, the large internet companies have stockpiled a ton of cash as they grew significantly the past several years, and they will be looking for ways to make a solid return on that money.”
In case you are wondering who is going to be taken out, here are some of Kahn’s picks:
As for which public companies are most likely to be acquired? Kahn evaluated them according to brand strength, product leadership, ease of integrating the smaller company into the larger company, and barriers to entry to determine that Omniture, the online analytics company, and MercadoLibre, the Latin American e-commerce company, are the most likely to be acquired. Shutterfly, The Knot, and Expedia were also attractive candidates, according to the report.
There are a few others I can think of… but we’ll leave that for a separate post.
Media sexy, but it does it pay the bills? I wasn’t even talking of only digital media, but all of media. Check out what NBC CEO Jeff Zucker has to say about digital media:
Faber: WHAT ACCOUNTS FOR THAT? RELUCTANCE ON THE PART OF ADVERTISERS?
Zucker: I THINK IT WAS THE LAST THING WE WENT INTO. THE FIRST THING WE’LL COME OUT OF TYPE OF MENTALITY. WHETHER THAT’S RIGHT OR WRONG, I THINK THAT IS WHAT HAPPENS. THE DIGITAL MARKETPLACE IS MUCH MUCH SLOWER THAN ANYBODY HAD ANTICIPATED. SO WHERE IS DIGITAL? I THINK IT’S STILL AN OPPORTUNITY . I THINK IT’S GOING TO CONTINUE TO GROW. IT’S NOT GOING TO BE WHAT PEOPLE THOUGHT IT WAS. CERTAINLY IN THE SHORT-TERM.
Faber: THAT’S NOT GOOD NEWS.
Zucker: PEOPLE HAD BEEN COUNTING ON THE DIGITAL EXPOSURE. I HAD BEEN TRYING TO TALK ABOUT THE FACT THAT EVEN AS IT GREW, IT WAS NOT NECESSARILY THE BIG GROWTH ENGINE FOR THESE LEGACY MEDIA COMPANIES THAT WERE TRADING THOSE ANALOG DOLLARS FOR DIGITAL DIMES. WE’RE NOW UP TO DIMES. THAT’S AN IMPROVEMENT.IT’S STILL NOT A DOLLAR FOR A DIME KIND OF BUSINESS THAT I WOULD LIKE TO BE IN.
Faber: BUT IT IS THE LONG-TERM FUTURE OF THIS INDUSTRY
Zucker: IT’S LONG-TERM BUT NOT — WE’RE GOING TO HAVE TO CONTINUE TO REDEFINE THE ECONOMIC MARKETPLACE WITH REGARD TO DIGITAL BECAUSE WE CAN’T JUST EXCHANGE THOSE ANALOG DOLLARS FOR WHATEVER THE DIGITAL DIMES ARE.
Funny, look at what was said of Hearst:
The Hearst news empire reached a circulation and revenue peak about 1928, but the economic collapse of the Great Depression and the vast over-extension of his empire cost him control of his holdings. It is unlikely that the newspapers ever paid their own way; mining, ranching and forestry provided whatever dividends the Hearst Corporation paid out.
Interesting, no?
From NYTimes:
“Executives at the Hearst Corporation say that one of their biggest papers, The San Francisco Chronicle, is losing $1 million a week.”
Related, perhaps? From BusinessWeek:
But Hearst’s collection of newspapers, magazines, TV stations, cable programming, and real estate holdings under Ganzi hasn’t performed too badly. Annual cash flows after dividends are well north of $1.5 billion on revenues exceeding $8 billion, say sources familiar with operations. It may be that the board of trustees felt cash flow needed to be invested more fully in businesses with future promise, rather than, say, newspapers, in which Hearst holds a sizable position.
(…)
At the same time, Hearst’s stakes—for the most part in technology companies such as broadband provider Brightcove, digital print company E Ink, and cell-phone video outfit MobiTV—have been timid, often no more than 25%. It could be that stellar records in the past as a passive investor drove that thinking. After all, its investment of $175 million for a 20% stake in ESPN in 1990 is worth more than $4 billion today based on some cable industry analysts’ projections of ESPN’s value. But it may be the Hearst trustees feel as if too much money has been left on the table based on.
Coincidence? I think not.
Life isn’t getting any better for magazine companies:
According to figures released by the Publishers Information Bureau and TNS Media Intelligence, in Q1 2008:
- ad pages fell 6.3% compared to the same period in 2007, from 54,126 in 2007 to 50,696 in 2008.
- total revenues remained basically flat with a slight 0.4% decline.
- the decline in ad pages was led by the top six consumer magazine publishers, with:
* Conde Nast down 2.6%,
* Time Inc. down 5.3%,
* Hearst down 3.2%,
* Bonnier down 11.5%,
* Hachette Filipacchi down 7% and
* Meredith down 12.2%.
The greater problem frankly is that even when the economy picks up, I can’t see how any advertising will rush back to print. Ad dollars are stampeding online… and the online spike in revenues for these companies’ websites isn’t big enough to offset the erosion in print.
Of course, one untapped, totally incremental area would be video content and advertising. While web video is cannibalistic for TV media firms, for print media it is all new. However, as some executives in these companies confide to me, print media does not have the pedigree or DNA to tackle video projects… so while this hypothesis remains intact in theory, I am not sure it holds water in practice.
Newspaper company McClatchy writes down $1.39B. Magazine company Hearst reloads its digital strategy. You’d almost think that by 2008 (14 years after Netscape’s Navigator browser launched and made consumption of content easy), print companies would be better positioned online, right?
Wrong. In many ways, media companies - be it print, radio or TV-based - seem to be more uncertain about their next steps today than they were in 1998.
Web 1.0: How Print Media Blew It
The Web represented an enormous opportunity - and threat - for print media organizations in the 1990s and they blew it.
They played into their weakness and let the threat overcome their strengths; in non B-School lingo: they did not unleash their premium archived text content online, they either put it behind subscription walls or kept it offline altogether. In all fairness, no one could really predict that consumers would tuck away their wallets and the free, ad-supported ad model would prevail… but prevail it did.
As a result, online magazines and blogs won market share. In parallel, search engines leveraged what content was out there and attracted the lion’s share of online advertising as paid search captured 40% of the online ad pie
Over time, print media organizations realized that unless they embraced the Web, they would go out of business: the marketing dollars were indeed pursuing consumers online. Today online ads capture 7-9% of ad dollars but consumers spend 15-25% of their time online. This is the single greatest inefficiency - thus opportunity - in recent history.
With the dot com bust all of the upside disappeared, what little motivation print firms had to tackle the Web went down the drain. A few companies maintained the investment and charged ahead. The outcome was inevitable: Ziff Davis failed to buy IGN, for example, and Ziff Davis bleeded money and value; IGN, however, went on to be acquired for a cool $650M to News Corp. (disclosure: News Corp. bought IGN, who bought my old company in 2005).
The lesson, again in hindsight, was that the print media companies should have capitalized on the weakness from 2001-03 to invest online. Few of them did. I was a VP of a men’s lifestyle online magazine and we beat out Esquire, Men’s Health, GQ, Playboy and Maxim because they ceased to invest online as of 2001 whereas we continued to publish content and build an audience.
Web 2.0: All About Video
Today, online advertising is steamrolling faster than ever: over $20-25B was spent in the US alone in 2007, global ad sales accounted for $45B, with an $80B global market expected by 2010. While paid search prevailed up to 2007, the next wave of growth remain display advertising and video. When it comes to the former, print companies’ online properties are a natural fit to capture a lot of revenue; but what about the latter: what about video?
Video advertising is definitely the single highest growth opportunity online. I am biased as the founder and CEO of WatchMojo.com, one of the largest producers of original video content. But that bias is not unfounded: 2008 marks the first year that online video ads will cross $1B in the US, and this amount will grow to $7.1B in 2012. What would global video sales be at that time: $15-25B, I forecast, if not more.
I’ve always been conservative: while I said that online ads would surpass TV ads by 2021, Yahoo!’s CEO Jerry Yang turned to be more bullish, arguing that this tipping point would happen in the next five years. Mind you, he’s trying to fend off MSFT and convince shareholders not to accept Redmond’s offer (disclosure: I own shares in YHOO and predict a sale of YHOO to MSFT for $50B).
But five years! Maybe Yang is right. Regardless, online video represents the single biggest opportunity for print media firms. The problem: video is not in their DNA.
I was shocked to find out, however, that many print firms have in fact been investing in online video. NY Times, for example, has been publishing video content. Who knew? I didn’t.
Yet they do. According to Senior VP of Digital Operations Martin Nisenholtz:
Times journalists all create more than 100 pieces a month. We stream five million a month.
“We decided that our mission was to extend the Times journalism, and that mission would depend on Times video. We decided to extend that mission into video.”
Mind you, we do more streams per month, and we produce more than 100 clips per month… and we’re no Times. But we’re a company that focuses on web video content, so it’s like comparing apples with oranges.
I also expect Dow Jones’ WSJ to offer more videos over time (and no, we’re not limiting this to Kara Swisher’s videos on Boomtown!) now that they are part of News Corp., the most diverse media company in the world, who is launching FOX Business News (hold on, someone is handing me a note: oh, FOX Business Network has launched, we regret the error).
How Print Media and TV Media View Online Video
Unlike TV-based media companies (which incidentally, I certainly count News Corp. a member of) such as CBS, NBC, ABC (owned by Walt Disney), print media views online video as incremental.
TV-based media companies view online video as cannibalistic. Yes, all of the players in this category will tackle the space head-on because they have learned from print media’s 1990’s era mistake (which we outlined above), but the problem is: the print media companies who dived deepest in the Web mantra suffered most: the Chronicle laid off 25% of its staff last year even though it “got the Web”.
TV media companies, on their end, will probably look at online video content producers like AOL viewed Weblogs Inc., Jason Calacanis’ professional blog network, which they bought for $25M in October 2005. When that deal happened in 2005, a lot of people wondered: why would AOL buy a “bunch of blogs”?
I recently spoke with a high-ranking executive involved in the acquisition and the rationale is actually quite logical:
- Time Warner’s model of producing text content was outdated and expensive.
- Weblogs Inc., meanwhile, had mastered the art of producing high-quality, low-cost content.
By acquiring Weblogs Inc., AOL got a lot of content, a slew of writers, online audience, but most importantly, a process to produce content for the Web at low cost.
The process alone is key. CBS’s Quincy Smith always talks about startup DNA. Startup and entrepreneurial DNA is what all media giants lack. Few however admit it. Fewer yet do anything about it.
But the last part to AOL’s rationale for buying Weblogs Inc., - and the last three words (”at low cost”) in particular - are very important because the Web shrinks the media, publishing, marketing and advertising business. The Web is all about efficiency and eliminating waste, something that traditional media was synonymous with; just ask NBC’s CEO Jeff Zucker who practically welcomed the writers’ strike as a means to weed off such waste. If you doubt that, ask yourself why NBC’s Peacock investment fund just added $750M to its capital base from $250M to $1B. That’s where the growth - and savings - are.
Buy vs. Build
Ultimately, I think that 2005-2007 marked a period where many media companies - be it print or TV-based - adopted a “build” strategy, be it with regards to content creation, aggregation or distribution. I won’t single any one company in this post because we work with most of them and I do not want to judge their deeds (I do that more than frequently, what I mean is that’s not the point of this post).
Expect 2008 to mark the transition to a “buy” mode with online video. Why? I should probably shut my trap here… but I feel quite comfortable sitting on my perch to be direct and candid about the following.
When you read, for example, that
- despite $7B in revenues per year, Hearst “has about 2,400 videos live on its sites and are on pace to produce another 150 programs across its network. The programs will range from how-to, to episodic shows to user-generated reporting, man-on-the-street”;
- NYT’s About.com has 1,500 videos on its site despite being acquired for $410M by NYT in 2003;
- NYT produces 100 videos per month and has a market cap of $3B.
Then you realize that a pure video content creation company like ours has more content than Hearst and About.com combined and produces more content per month than the NYT does and does so across a larger base of categories then you start to wonder: how much more and how much longer will these companies invest to build?
You want candid and direct? Keep reading.
It’s all about Startup DNA
Big media companies remain just that: big media companies. Such firms have experienced and talented people who are certainly knowledgeable and smart, but they also operate in big companies where everyone is spending a portion of their day justifying their raison d’etre.
After News Corp. bought IGN and IGN bought my company, I knew that I did not want to stick around and justify my worth. So I built WatchMojo.com. I could have built WatchMojo.com with less strain, stress and risk within a company, but no way on earth would it be as big as it is today had I done that.
Why? Because all factors being equal, startups work more efficiently than big companies, and the Web makes that fact even more glaring. When media companies seek to build from within, inadvertently they compete with startups and only showcase just how inefficient they are.
In the initial few months, quarters, even years, big media employees facing the build vs. buy debate cast their votes squarely on “we can do this ourselves, why buy” (I’d do the same thing, frankly… maybe).
But over time, as big media companies pile on the cash on their balance sheets but they see their income statements shrinking at the expense of the Web… you can’t help but think that sooner or later, the internal preference to build will tip in favor of buy, buy, buy. At least if you ask senior management who has to answer to shareholders.
Content is King
Connecting all of the dots, it’s thus very funny to me - a former ad exec. and storyteller - that online aggregation and distribution plays like Joost, Hulu, Tidal TV, Veoh et al. keep raising more money at ever higher valuations while content creator companies remain somewhat off the radar.
Think about it: today Silicon Alley Insider and Valleywag commented on Veoh’s attempt - via Bear Stearns - to add to their existing $40M financing and add $40M more! I want Veoh to succeed: I love their crazy CEO and they are one of our hundreds of distribution points, but at some point, how much leverage do such companies have in exits for their investors?
Revver sold for less than $5M despite raising $13M in funding. Not sure about the math there but that’s not a sound exit strategy. When the dust settles, Veoh and their competitors will ultimately be vying to be # 3 after YouTube and News Corp.’s MySpace (more disclosures: all of these companies are part of our sprawling syndication network).
We in the online video space - be it content producers, aggregators or distributors - all want the same thing ultimately: more dollars flowing to online video advertising… but what will make that happen is better video content and more video content.
Content is king.
Yes, it’s a cliche. But cliches are cliches for a reason.
Nick Denton - journalist, author, publisher, entrepreneur, event promoter - has consistently rewritten the rules of publishing while adhering to the most important values in journalism. As blogging becomes more commonplace, influential and important, the line between blogging and publishing becomes quite blurry, but wherever that line sits, Denton is pushing it relentlessly.
Today Valleywag - a Gawker Media blog - published a memo from Gawker Media management about the new bonus system being introduced by Denton to drive traffic and ideally, boost quality of the sites’ content in an increasingly cluttered and noisy blogosphere and publishing landscape which is seeing bloggers become publishers and traditional publishers become blogging empires.
Frankly, I just got back from a trip and a two-hour drive in a blizzard to give the concept and premise itself much thought, yet, but by having Valleywag break the story on a company initiative, Denton is beating would-be critics to the punch (if there would be any) and ensuring that the link mojo and traffic filters to his empire. That is one example of Denton’s savvy and one-finger-salute to the establishment (whichever one) that would have a comment on the practice. You can imagine other bloggers take notice, and traditional publishers’ journalists shake in their boots at the mere concept of a performance-based compensation system.
Denton has consistently said that Gawker Media is unsellable, which only adds to the hype and aura of his empire. I fully think that Denton turns away calls from investment bankers and private equity firms day in, day out… long-term, I don’t doubt that Gawker could fetch quite a tidy sum in a sale, but in Gawker Media, Nick Denton might have built the Conde Nast or Hearst of the 21st century, with little or no outside capital.
More power to him for that.
Editor’s note: I knew we were speaking too soon. One more deal to add to the list: Time Warner to buy Quigo. Added to the bottom of the list, under ad networks.
According to The Jordan Edmiston Group Inc.’s October 2007 Client Briefing report, the number of deals through the first three quarters of 2007 exceeded full year 2006 figures: 637 transactions with $95B in value thus far. Do the math and that is $150M per deal, quite rich.
As such, publishing our list in November 2007 is a bold and potentially premature thing to do. Regardless, why wait?
What started off as a Top 10 list turned into a Top 27 list: then it got out of hand because we were comparing apples with oranges. We’re at over 30 M&A deals in web-oriented sectors that stood out.
The deals are not listed by size or order of magnitude, just a combination of value, strategic fits and long term potential. Others made the list due to the storylines, frankly, or because they took a while and garnered the media’s attention.
At least one, you’ll see which one, has yet to be finalized, but we expect that it will.
Enjoy, feel free to add, criticize, re-order etc. Surely we’re missing some major ones… some time in December, using emails, comments, suggestions and votes I’ll probably publish a top 10 list of 2007 acquisitions…
ONLINE/OFFLINE PRODUCTIVITY SUITES & COLLABORATION TOOLS
- Yahoo! acquires Zimbra for $350M
Yahoo!’s email service remains the most popular in the world, but when it comes to online meets offline office suites, it was sorely lacking, in particular due to Google’s encroachment onto Microsoft’s terrain against the backdrop of Yahoo!’s dead silence on the front. But, in one move, Yahoo! staked its claim to the party.
- Google acquires Postini for $625M
Google is trying to dethrone Microsoft’s grip on productivity suites while Microsoft is trying to encroach on online advertising. Google has bought Writely, launched a spreadsheet program and while these initiatives and acquisitions have gotten the vocal minority excited, they have failed to win the hearts and minds of corporate IT decision makers.
While we doubt one decision alone will make a change, the acquisition of Postini - makers of corporate email security tools and anti-spam software - could technically make a difference over time. Let’s face it, Gmail is indeed pretty cool, but corporations won’t be caught dead using it. Maybe by meshing Postini with Gmail, offices worldwide will stand up and take notice.
- Facebook acquires Parakey
In 2007, Facebook grew synonymous with hype. Anything the company touched, or sought to touch, quickly turned to gold. Mind you, the company’s torrid growth rate was nothing short of breath taking. But when Facebook announced that it had acq-hired Parakey, a yet-to-launch web operating system developed by Firefox co-founders Blake Ross and Joe Hewitt for an undisclosed price, people noticed because this meant that Facebook had MSFT in its cross hairs. Over time, MSFT made a $240M investment in Facebook, creating an alliance between the two firms, and suggesting that Google, and not Microsoft, was Facebook’s true nemesis.
See HipMojo.com’s post on the deal here.
- Cisco buys Webex for $3.2B
Webex was the first stock I bought, and the reason was simple: companies spend so much money on travel and phone calls are not always easy. Webex was a simple way to bridge the gap between people who needed to at least be on the same page when it came to sales calls and phone meetings etc. Webex who for the large part of the 21st centuy traded slightly above $1B in market cap ended up fetching quite a premium from Webex, selling for a whopping $3.2B.
See HipMojo.com’s post on the deal here.
PUBLISHING
- Answers.com acquires Lexico for $100M
Answers.com, whose parent GuruNet Corporation paid $57,000 for the URL moniker, turned around and paid $100M for the parent corporation of Dictionary.com and Thesarus.com, fitting for a company who bills its Answers.com site as the world’s largest Encyclodictionalmanacapedia.
Of course, Answers.com got far more than two sexy URLs, Lexico did decent revenue and earnings, too. But any way you dice it, the deal was rich, translating to:
- 35 times earnings
- 15 times revenues
- $9 per unique
See HipMojo.com’s post on the deal here.
- Discovery Holdings acquires How Stuff Works for $250M
How Stuff Works has been around for what seems to be forever. It raised $50M for expansion this year and many expected the company to be the one signing the checks, but by year’s end, the company’s interest in all things video led to its sale to Discovery Holdings for a whopping $250M.
See HipMojo.com’s post on the deal here and here.
- CBS acquires Wallstrip
On the one hand, as a fellow video producer at WatchMojo.com myself, I was happy to see Howard Lindzon’s Wallstrip exit successfully to CBS: it showed that one can create something of value in video content and, in all honesty, it created a floor price and a comparable… But, by the same token, I think Wallstrip sold too soon and for too little (nothing against CBS).
Ultimately, in the year when marketers spoke loudly against user generated content, it created a first example that professional made video could represent a valuable business if done right. If I dare say so, we’re now going to show just how much a video content creation and syndication business can scale and grow if you stick to your guns… but that’s for a separate post.
- Hearst acquires UGO for $100M
Men don’t read magazines. They’re watching less and less TV. Where are they? Apparently, online and playing video games. If that hypothesis and premise is true, then Hearst made a much needed investment to get into a video game publishing network targeting men, that of UGO. Incidentally, when Viacom and News Corp. vied for IGN Entertainment [disclaimer: my one-time employer after it bought the company where I was a partner], Hearst balked at the price tag, which hit $650M. But two years after that deal, the trend lines were clear: Hearst needed to get serious about reaching men online and the $100M acquisition of UGO was to serve as the spring board. UGO had raised $90M since its inception.
See HipMojo.com’s post on the deal here.
- CBS acquires Max Preps for $43M
High school athletics is a hot sector. High school sports are a key part of local content and local advertising has always been a huge market, and one that is up for grabs, particularly as newspapers see ad dollars flow to the Web. More importantly, high schoolers don’t spend as much time watching TV (not suggesting that all high school sports fans are actually high schoolers, of course). Combine these trends and you see why CBS’ acquisition of Max Preps was a smart one. After the deal, Max Preps was rolled into CBS’ College Sports Television (CSTV) and its network of websites. It’s always very important to hook consumers early on, and there ain’t a better time frankly than before the college years.
- Yahoo! acquires Rivals.com for $100M
$100M for a sports site geared towards college sports seems like a lot, for sure, especially when the previous year, News Corp. bought Scout for $60M and CBS bought Max Preps for $43M.
But when you consider that said company has raised $75M in venture funding and run by CEO Shannon Terry who made the list of SBJ’s Top 20 in Online Sports, you know the deal’s final price will get high.
Ultimately, by making the deal, Yahoo! leveraged its massive audience to become a main player in sports, rivaling FOXSports.com, SI.com and ESPN.com. Mainly, by holding out and seeing CBS and News Corp. buy Max Preps and Scout respectively, Yahoo! not only saw a floor being created for Rivals.com but also had to pay a premium to ensure that the company not fall in another media company’s hands.
See HipMojo.com’s post on the deal here.
- News Corp. acquires Dow Jones for $5B
I know what you’re thinking, did he fire six shots or only five, “Dow Jones is not online. I mean, it’s flagship product, the Wall Street Journal is not even free!”
My friends, Wall Street Journal has the single most successful subscription business and gets 10m unique users per month. For decades, lest centuries, media moguls and tycoons have pushed the mantra of synergies. Rupert Murdoch in one single transaction:
- acquires one of the two assets he’s always fancied (WSJ, other being the Financial Times),
- he gets the best springboard for his new Fox Business Channel,
- acquires 10M uniques on WSJ.com, or 17M in all if you include Marketwatch and Barron’s,
- has the right, but not the obligation, to open up WSJ.com and make it into the most valuable place advertisers can reach the world’s wealthiest and most influential readers.
If you consider all of the variables, that’s one helluva deal.
SOCIAL MEDIA
- American Greetings acquires Webshots for $45M
Forget the fact that Webshots remains a strong brand that just a few years ago was bought by CNET for $70M, but Webshots is actually very complementary with American Greetings’ business. Photosharing has become a huge market, and while in CNET’s hands Webshots needed to be a leader in its space, under a company like American Greetings, it need not be. Moreover, while in the hands of CNET Webshots needed to generate sizable ad revenues (given how many pageviews it generates), in American Greetings’ hands, it need not. In other words, American Greetings is buying a large online property that is very strategic to its core business at a discount. That’s a great deal.
- CBS acquires Last.fm for $280M
Extra! Extra! Read all about it: CBS’ (and traditional media in general) core businesses are shrinking. CBS is the world’s largest TV company in terms of ratings, the largest outdoor company and second largest radio company. But like TV (and print), traditional radio is shrinking, so CBS made the prescient move to buy Last.fm. Similar to Pandora, Last.fm allows users to find new music based on their tastes and the overall community’s listening patterns. Was Last.fm the absolute best and biggest site out there? Probably not, but when you are CBS, you cannot pull a Bertelsmann and invest in a Napster-esque company that has burned more bridges than [won’t go there but insert anything you wish here].
See HipMojo.com’s post on the deal here.
- Cisco acquires Tribe
Cisco is no stranger to acquisitions, of course, but it usually acq-hires teams of engineers or technology. But by buying Tribe, one of the earlier social networking sites, did Cisco signal a shift away from Sun Microsystems’ mantra that “the network is the computer” to social networking is the Web? Perhaps, time will tell.
Ultimately, it’s a tacit admission that the web will become central to, well, everything.
See HipMojo.com’s post on the deal here.
- Nokia acquires Twango for $96.8M
Twango combines online storage with social networking, allowing users to organize and share photos, videos and other personal media.
Twango was founded in 2004 by former Microsoft employees and has around 10 employees. The deal is estimated to be just under $100 million, $96.8 to be precise. That’s right, it weighed in at $10M/employee. Twango is a small step in the seamless transferring of files from handsets to PCs. The fact that Nokia made the acquisition suggests that Finland’s most valuable company should not be seen as a telecommunications hardware company alone.
- News Corp.’s Fox Interactive Media/MySpace acquires Photobucket for $250M
Photobucket’s acquisition by MySpace makes the list mainly because the storyline behind it was pretty soap opera-ish. Photobucket builds business - according to MySpace and FIM executives - a la YouTube by leveraging MySpace’s audience and community, then adds insult to injury by trying to run ads in their slides.
Then Photobucket’s M&A advisors Lehman Bros. whisper their asking price: $300-400M. A lot of people scratch their heads. Of course, fearing a repeat of YouTube, where a company grew thanks to MySpace but sold to someone else, News Corp. blows a gasket and its MySpace site blocks Photobucket.
Suddenly, value of widget-driven businesses and Photobucket in particular plummets. Back channel diplomacy ensues, coup de theatre follows in the shape, form and fashion of a $250M buyout by News Corp.
In fact, the rumor of an impending deal broke out in early May, and the deal was formally announced on May 30th.
See HipMojo.com’s post on the deal here.
- Hi-Media acquires Fotolog for $90M
When European online marketing juggernaut Hi-Media announced its acquisition of Fotolog, eyebrows were raised. On the WTF? side of the argument were those who said: “using Fotolog’s forecasted 2007 revenue of$2.3M, a net-of-transaction fee sale of $90M implies a pretty rich 39 prices-to-earnings ratio. That’s rich. But, the counter-argument was that Hi-Media was acquiring a community of image-crazed users for 1/3 of what News Corp. paid for Photobucket; yes, call it the reverse fool theory. With $15M in financing, a $90M payout was part of the lure, turned out that the institutional shareholders of Fotolog decided to hold on to their stock holdings of Hi-Media. It should be noted, that just before the acquisition, Fotolog had signed a $75M advertising deal with Google, over 36 months, or roughly $2M per month.
See HipMojo.com’s post on the deal here.
- MSNBC.com buys NewsVine
What does this mean for Digg? We don’t know, but last year, the leader in social bookmarking and news, Digg, supposedly asked for $150M from News Corp. Rupert Murdoch balked, launched MySpace News. I’m not sure how well MySpace News is doing, I suspect Digg is doing quite well, but the fact remains, I doubt Digg will get $150M (then again, a sucker is born every second) because Stumble Upon’s $75M price tag and NewsVine’s price tag imply a lower value for Digg.
Of course, this is a post on NewsVine, not Digg. I can’t understand really the logic and prevailing wisdom to sell NewsVine, a company who had raised less than $2M in financing and who was riding high as America is about to enter an election season and NewsVine’s core focus seems to be political… but, I digress. On MSNBC.com’s part, this marked the NBC/MSFT joint venture’s first acquisition, ever.
E-COMMERCE
- Hearst acquires Kaboodle for $40M
Hearst bought a handful of companies this year: UGO for $100M, which was pricey but not very expensive for a company that raised $90M of funding since inception. But given Hearst’s traditional business focus in magazine, the deal for Kaboodle is intriguing because it allows fashion and retail advertisers - two of Hearst’s main clients - to tippy-toe online and connect branding with purchasing. If Hearst can pull this off, the combination can become powerful, and valuable. Will they? Big old media doesn’t have the best track record, admittedly, so time will tell.
See HipMojo.com’s post on the deal here.
- eBay acquires Stubhub for $310M
eBay = auctions, Stubhub = scalping. It didn’t take the MBAs very long to see fits. Speaking of graduate degrees, founders Jeff Fluhr and Eric Baker owned roughly 35% of the company and with $15M in funding over the years, they managed to build a controversial but successful company that did $100M in sales and $10M in EBITDA. The company’s backers included Allen & Co, Blue Water Capital, Pequot Ventures and Staenberg Venture Partners.
SEARCH, NAVIGATION & DIRECTORIES
- R.H. Donnelly acquires Business.com for $345M
When word got out that Business.com might be selling for over $300M, the natural reaction was to think “the bubble is back”. After all, just a few years ago, founders Sky Dayton and Jake Winebaum acquired the URL for $7.5M from Marc Ostrovsky. At the time, even I thought “will they ever generate $7.5M in revenues off the site, over the course of its lifetime”? Of course, when Dayton and Winebaum bought the URL, Google had yet to create the keyword ecosystem that today underwrites much of online advertising. While critics maintained that by 2007, Business.com was little more than a directory of resold Google text ads, R.H. Donnelly saw salvation for their shrinking print directories and agreed to acquire the firm for $345M.
See HipMojo.com’s posts on the deal before it happened here and afterwards here.
- eBay acquires Stumble Upon for $75M
Stumble Upon’s 2.3 million users and 5 million daily recommendations caught the attention of AOL, Google and eBay, and ultimately, after valuations ranged from $40-75M for a few months, eBay walked away the winner. When the rumor popped up and few understood the logic, though technically, like eBay’s Skype acquisition, the prevailing wisdom of the leading auction community to acquire a leader in “stumbling navigation” makes sense. Of course, that’s what was said about Skype too, and this year eBay wrote down a chunk of that acquisition, even though the fit was even stronger there. Stumble Upon raised less than $2M, which means that founders Garrett Camp, Geoff Smith, Justin LaFrance and Eric Boyd walked away with a nice payday each. Lesson for entrepreneurs: success did not come over night, the site was founded in 2000!
See HipMojo.com’s post on the deal here and here.
- Microsoft acquires Medstory
For all of the talk about vertical search engines being the next great thing, very few case studies proved to be profitable exits. Then came along Medstory and the battle for health information, which led Microsoft to acquire vertical search player Medstory as Google, Yahoo! and Microsoft all vied for search market share and to become the gateway to users’ health information online.
COMMUNICATIONS, WIRELESS VOICE SERVICES
- Google acquires Grand Central for $45M
Let’s face it, financially, Google remains a on-trick pony with 99.9% of its revenues coming from paid search ads and the two related products: Ad Sense and Ad Words. But Google’s product assortment has grown very attractive, from GMail, to Maps, Google Earth, YouTube and soon Doubleclick, Google is certainly laying down the foundation to become a diversified new media and technology company. In that vein, the acquisition of Grand Central to arm users with one number on any platform is consistent with Google’s global and multi-platform ambitions. In fact, at $45M, the deal was cheap and provided good value to Mountain View.
- Microsoft acquires TellMe for $800M
TellMe is “a leading provider of voice services for everyday life, including nationwide directory assistance, enterprise customer service and voice-enabled mobile search.” If the price tag weren’t so darn high, it would surely be higher on this list. Regardless, this catapults MSFT into voice services and voice-enabled mobile search, which a few short years from now will actually help it quite a bit against the #1 and #2 in search, Google and Yahoo!, respectively. While $800M is a large price, if it can execute on that alone, the deal can be a enormous coup for Redmond.
MOBILE AD NETWORKS
- AOL acquires Third Screen Media
Indeed, to quote the Wall Street Journal’s Kara Swisher, new CEO Randy Falco has been busy torching AOL’s Dulles, Virginia’s HQ, but while he’s been doing that, he’s also been making some bets on the next growth area: wireless. In 2007, AOL bought Third Screen Media, a mobile advertising network and ad-serving management platform provider. Will this be a repeat of Advertising.com’s $435M which today drives most of AOL’s top line? Who knows. I doubt it, wireless is way too embryonic, today. But one day, when cars fly and everyone has a pony, wireless entertainment and mobile advertising shall inherit the earth. Time will tell if Randy Falco will be ruling the fiefdom when that happens.
- Nokia acquires Enpocket
In the emerging mobile content and advertising market, Nokia hopes to expand its footprint beyond hardware. To achieve its goal the handset manufacturer agreed to acquire Enpocket to build its advertising platform.
Though Nokia has a content and advertising presence in Europe, its wanted to expand there and elsewhere, including the U.S., through internal development and acquisition. The Enpocket acquisition follows Nokia’s buy of social media sharing service Twango, as well as internal moves toward content publishing.
Enpocket has customers in the US, Asia, and Europe, including Vodafone, Telefonica, British Telecom, and Sprint. It delivers advertising across a variety of mobile formats, including SMS, MMS, mobile Internet, and video. Its customers include both carriers and the companies with which they do business, most notably Pepsico.
In some ways, this deal was in the same vein as Microsoft’s acquisition of European mobile ad firm ScreenTonic with the intention of integrating its capabilities into adCenter: “We want to deliver a platform that helps advertisers buy across all digital mediums,” said Joe Doran, GM of Microsoft’s digital advertising solutions. “As we build out the breadth of our platform, we are continuing to invest against that vision.”
- Nokia acquires Navteq for $8.1 Billion
Nokia is the world’s largest manufacturer of cell phones. Nokia owns this market, basically, and any acquisition it makes is bound to have ripple effects. NAVTEQ is a leading provider of comprehensive digital map information for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions. NAVTEQ also owns Traffic.com, a web and interactive service that provides traffic information and content to consumers. The Chicago-based company was founded in 1985, generated 2006 revenues of $582 million and has approximately 3,000 employees located in 168 offices in 30 countries. Incidentally, “Internet and wireless” make up only 5% of Navteq’s revenues, compared with 25% from mobile devices and a whopping 62% from in-dash navigation systems.
Translation? Lots of upside in Web and mobile revenues and the creation of a very powerful wireless and local ad network, perhaps?
AD NETWORKS
- AOL acquires Tacoda for $275M
One of the bigger and hyped phenomenon (fairly or unfairly) of web advertising remains is behavioral targeting (BT). Rightfully, to better optimize inventory and users, and to make the promise of web advertising a reality, BT has a role to play. But AOL’s acquisition of BT also demonstrated BT’s inherent limitations: few sites want to partner with BT firms, they want to own the data and underlying IP. Will it be an Advertising.com type of payoff? Time will tell, but Tacoda within AOL is worth far more than outside, in that sense, this deal made sense…
See HipMojo.com’s post on the deal here.
- Google acquires Feedburner for $100M
Google paid $100M for a company with $10M in revenue. Regardless of the financial merits of the deal, the fact is that had Google sought to emulate Feedburner (even had Feedburner not existed), the media companies that partner with Feedburner would not have allowed Google to access such private and valuable data. In other words, Google bought something that was worth many times more to Mountain View as in a year where it had become more and more enemy than friend.
See HipMojo.com’s post on the deal here, Google Buys Feedburner and Encroaches on Organic Ad Results.
- Yahoo! acquires Blue Lithium for $300M
Blue Lithium’s focus on introducing large, sexy brands to the virtues of advertising networks is legendary. Before more and more larg, Fortune 500-type marketers embraced running online ads - let alone using ad networks - Blue Lithium stood out of the clutter with a product and service that appealed to both sides of the online advertising ecosystem. Once upon a time, Blue Lithium’s management even talked of its advantages and strengths over online ad champion Google, but then lo and behold, Yahoo! acquires Blue Lithium for $300M to maximize the monetization of its ad inventory and to bolster its online advertising network both outside Yahoo!’s burgeoning media properties.
Given that the next wave of growth in online advertising will be display / banner ads (after video) and that will come from Fortune 500 marketers, this is a move that can pay off considerable dividends to Yahoo!
See HipMojo.com’s post on the deal here and here.
- Google acquires Doubleclick for $3.1B
Technically, this deal has yet to go through. But we added it onto this list because it shows that Google is completing its arsenal of web tools. Starting off with search, then video (YouTube), then email/newsletter (Feedburner) and now display/banners (Doubleclick), Google has the potential to circle the loop of online advertising.
We’ve covered this deal ad nauseum, so we’ll simply link back and leave you with this quote from one of our posts:
“When a lot of people said Google just hit a home run in online advertising by buying DCLK, they were wrong because saying DCLK is an online advertising play is akin to saying MSFT is strong with ad agencies because ad agencies use powerpoint in their client pitches. DCLK sold all of its media assets to L90/MaxOnline when ad rates were low and no one really paid CPM rates, and got into software only”
But, that notwithstanding, Google buying Doubleclick is a key deal because it bolsters Google’s online advertising software suite, which in itself helps it attack MSFT on many more fronts.
See HipMojo.com’s post on the deal here:
- Google Buys Doubleclick for $3.1 Billion; Blocks MSFT Acquisition
- Questions in Wake of DCLK/GOOG Deal; MSFT/YHOO Repercussions?
- Two Variables in DCLK/GOOG Deal: Dart for Publishers/Advertisers; All Cash Deal
- Why GOOG’s DCLK Makes Little Sense (To Me)
- DCLK Winners: Hellman & Friedman; Losers? DCLK’s Shareholders?
- aQuantive Under Spotlight
- Yahoo! acquires Right Media for $750M
Technically, Yahoo! paid $45M for 20% of Right Media first, then less than a year later, it paid $680M for the 80% it did not own. Right Media was unique in that it worked with other ad networks to allow publishers to create an auction process for a publisher’s long tail inventory. On a property like Yahoo! alone, with billions upon billions of remnant, unsold ad inventory, such a platform can be worth billions each year.
And, as Yahoo! develops its network online (away from Yahoo!-owned sites), Yahoo! liked what it saw enough to justify pushing up the price of the asset four times in less than a year.
See HipMojo.com’s post on the deal here.
- WPP acquires 24/7 Realmedia for $649M
WPP is one of the largest agencies in the world, a marketing behemoth with huge ambitions in digital advertising. It got one step closer to that when it bought 24/7 Realmedia, getting an advertising network, an email newsletter business, search marketing tools and much more. With its extensive advertiser relationships, WPP is sure to get enough bang out of its $649M bucks.
See HipMojo.com’s post on the deal here.
- Microsoft acquires aQuantive for $6 Billion
Microsoft generates very little from advertising. In the future, all advertising will be planned, bought and managed on digital platforms. And digital advertising will be larger than all offline advertising. Furthermore, targeted/tracked (web) advertising will command a considerable premium to non-targeted and untracked advertising. As such, for MSFT to win aQuantive - the crown jewel in the sector - it had to pay a commanding premium.
Like it or not, the market determines how much an asset is worth, which in turn is a function of demand and supply. aQuantive had a range of suitors, and the company that wanted it most ended up paying for it. MSFT’s acquisition of aQuantive can be a game-changer for MSFT if it does not botch it up.
See HipMojo.com’s post on the deal here.
- Time Warner acquires Quigo for $340M
Quigo, which signed a deal with Time Warner’s magazine division, Time Inc, and has more than 500 publisher relationships, is an Internet ad-targeting company that lets advertisers buy sponsored listings, much like Google’s AdSense, based on keywords or subjects.
AOL in September restructured its advertising business, consolidating ad network Advertising.com; Tacoda, which targets users based on their habits; wireless ad network Third Screen Media; video ads company Lightningcast; and ADTECH, a global ad-serving company, into one division.
What did you think of the list? Corrections, suggestions, comments etc., add to comments or email me at ash@mojosupreme.com.
Apparently, traditional media’s love and hate relationship with YouTube took an interesting turn tonight: NBC canceled its channel on YouTube.
I won’t comment on that directly since WatchMojo.com is a content provider on YouTube and enough people are already commenting on the unconfirmed news, but I’ve been meaning to look at the interesting dynamic between traditional media companies and web video startups, and this is one more chess move in the big game that’s really only starting.
When you realize that Web Video is a $150B market cap opportunity by 2011, but not for traditional media and What The Math Suggests Old Media Should Do with Web Video (invest, not acquire), it’s not a surprise to see media companies wanting to be in control of their destiny.
NewTeeVee has a fantastic overview of media companies’ investments in web video startups, which I will shamelessly copy, paste, update (they forgot CBS’ stake in Spotrunner, for one, amongst a few others). I’ll also add some color.
Does it help or hurt companies when they get an investment by media companies?
Like most fine questions, answer is: It depends.
Why Strategic Money Helps
When it comes to strategic investments, one school of thought is that it encourages VCs to invest because they see a clear connection between investment and exit. From an operational perspective, clearly, getting a media company to invest in you will help in terms of validation, sales and marketing. Right Media said that they got a lot more calls for business after Yahoo! bought 20% for $45M. In their case, it also helped prop up the value of the company, subsequently selling the remaining 80% for $680M. Of course, what helped Right Media mainly was the market environment that saw 24/7 RealMedia, aQuantive and Doubleclick get acquired for high multiples.
Why Strategic Money Hurts
Now, the flip side on selling a stake to media companies: The other school of thought suggests that this also closes potential upside in any negotiations: if (say for example) NBC owns a strategic stake, that is great in many ways, but they might ask for a First Right of Refusal (FROR) in any M&A talks, meaning that it’s their right but not their obligation to match any offer and buy you.
The problem with this scenario is not in theory but in practice, because a would-be buyer, say CBS for example, would not even consider looking at buying you because it means they have to spend time and money on due diligence and then the holder of the FROR can walk in, match the offer and win.
Worse off, there’s nothing that forces the holder of the right to initiate talks. They have the option to do so, but not the obligation. It’s also not like you have the conceptual equivalent of a pull option, which is the right to sell. So while I myself love the allure and operational upside of getting a media company to back you, I also understand why some investors that I talk to don’t share that optimism and bullishness.
So technically, while some amongst the “smart money” might love strategic money, as an entrepreneur, I’d be wary (in all candor, I’d also consider it and reach out for it because the benefits are long and clear, too).
How to Structure a Strategic Investment by a Media Company?
When I was at the Tech Crunch 40 conference, Jason Calacanis (who raised money from News Corp. for his Mahalo project) suggested that the optimal way is to have an institutional investor (such as a VC) set the terms and have other strategic investors tag along, instead of have the media company set the terms. I think that is probably the wisest way to go, though one might not always have the luxury, of course.
What About Derivatives in Lieu of Equity?
Of course, some times a media company does not actually invest cash, but they strike a business deal and want to get some skin in the game. In this case, you can look at derivatives, such as warrants.
We’ve seen this happen before, too. Google did that when AOL and Yahoo! used Google to power their search engine and did not actually invest any money.
I’m not recommending any entrepreneurs to pitch warrants in lieu of equity in exchange for a cash investment… I’m pretty sure if you have NBC, CBS, News Corp., Walt Disney’s ABC, etc. sitting in front of you and showing interest to invest cold hard cash and you suggest warrants, they’d spit in your face and pile-drive you into the boardroom.
I’m just saying that in those rare events when it’s a business development partnership, an entrepreneur should consider warrants, as Google did, to get the larger media company interested in seeing you grow, cause the potential capital gain is a nice incentive and bonus.
Investments Made by Media Companies in Web Video Related Startups
Anyway, here are some investments by media company courtesy of NewTeeVee, with a bunch more I’ve added. I’ll continue to update this and if I missed anyone email me at ash@mojosupreme.com.
- Brightcove: video-publishing tool provider
- BroadLogic: video processing chips (with Comcast Interactive Capital)
- Ripe Digital Entertainment: on-demand TV network for young men
- ScanScout: contextually relevant video ads
- Veoh Networks: online video platform
- Visible World: video advertising for TV and broadband (with Comcast Interactive Capital)
Comcast Interactive Capital (CMCSA)
- BlackArrow: video advertising platform for cable
- BroadLogic: video processing chips (with Time Warner Investments)
- Revver: video-sharing with revenue sharing for all creators
- RGB Networks: video networking systems
- Visible World: video advertising for TV and broadband (with Time Warner Investments)
- Vitrue: white-label video sites and advertising services
Peacock Equity (GE)
- Firebrand: commercials as content portal (launching next week)
- Adify: contextual video ads.
- NBC also has an investment in Worldwide Biggies, a digital studio.
Hearst Interactive Media (HTV)
- Brightcove: video-publishing tool provider
- Sling Media: place-shifting hardware devices (sold to EchoStar)
- The NewsMarket: news video archive
- Worldwide Biggies: digital studio
Steamboat Ventures (Wall Disney’s VC Arm)
- Move Networks: streaming television platform
- 56.com: Chinese video-sharing site
- CTS Media: Chinese video advertising
- Netmovie: Chinese VOD
- UUSee: Chinese Internet TV platform
Yes, I noticed the obsession over China.
Bertelsmann Digital Media Investments
- UITV: Chinese Internet TV site
- Joost
- Spotrunner
- Stake in male-oriented video-sharing site Break.com.
- Brightcove: video-publishing tool provider
Yes, everyone owns Brightcove.
That’s just the investments, if you consider acquisitions, the list would be longer, and that’s something I’ll start working on.
You might notice the notable absentee is News Corp., and I don’t think it’s a coincidence.
Yes, they own 5% warrants in ROO, with the option to buy 5% more, but that was given to them… When News Corp. makes investments, they’re not small, they’re in large entities, see for yourself.
As I said, this is not a coincidence. When I was attending another conference, Paid Content’s EconSM shindig, I was in the audience when Mike Lang, Executive Vice President Business Development & Strategy at Fox said that News Corp. wasn’t interested “in leasing companies, he was looking at buying companies” and if I were News Corp., I’d share that outlook, frankly…
Not all media companies have that outlook, of course: it is interesting that CBS’ Quincy Smith and Michael Marquez have decided to take CBS Interactive in a different direction by mainly investing in - and not buying - young new media companies.
Time will tell which decision yields the best results.
Related on HipMojo.com:
- What Old Media Should Do with Web Video: The Math
- Web Video is a $150B market cap opportunity by 2011, but not for traditional media.
Hearst Magazine last year bought eCrush, “putting points up” in the teen category.
Then, earlier this year, it bought UGO, which was clearly making a footprint in the online men’s space.
Today, it goes back to its roots and acquires Real Age, a site with a remarkably similar women’s skew as its Hearst magazines readership… since, like we all know, men don’t read magazines anymore.
The love fest from Real Age to Hearst:
“With its enormous audience of women, Hearst is the perfect partner for RealAge,” said RealAge Founder/CEO Charlie Silver. The intersection of demographics and content between the two companies provides for powerful cross-promotion opportunities that will enable us to extend our tools and expertise to a bigger audience.”
Hearst returning the favor:
RealAge was founded in 1999 by Charlie Silver and Michael Roizen, MD. The company delivers highly-targeted health and wellness content, along with complementary advertising, to consumers who have taken the RealAge
Test – the first scientific, patented measurement of the age of your body. Based on an analysis of more than
25,000 medical studies, RealAge identified 125 factors that influence the rate of aging – many of which can be changed.The company then developed the RealAge Test and website, www.realage.com, and Dr. Roizen wrote RealAge: Are You as Young as You Can Be? The book was embraced by Oprah Winfrey and quickly became a No. 1 bestseller, providing national recognition for the RealAge brand.
Oprah, need we say more? Rafat Ali says the deal might have been a $100M one, possible if Real Age indeed made $20M a year in revenues, making it a 5x on sales.
PLAY
