John Ellis makes the case for Google to buy the New York Times. In a nutshell:
What’s in it for Google? Well, for one thing, it’s cheap. Sell off the New England properties and the real cost is $3 billion. That’s not much money to buy one of the premier brands of the information age. It also comes with some excellent real estate, which further reduces the risk. And happily enough, it will probably get cheaper in the coming months. So the price is definitely right.
Second, Google is embarking on an ambitious mobile platform. It is buying wireless spectrum and will soon introduce Google Mobile. In so doing, it is entering into an arena where the established players have hired (almost) every lobbyist and (almost) every law firm with expertise in telecommunications in Washington, DC and in virtually every state capital. Owning the New York Times would level that playing field in one fell swoop. Owning major media outlets is a strategy that has worked very well for General Electric, Disney, News Corp., Time Warner and others in their dealing with the federal government and with state governments. There’s every reason to believe it would be helpful to Google.
Third, there’s all that content. Google is a company that could actually make money repurposing the cultural and culinary coverage, to pick just two categories, of the New York Times, across both its Internet and mobile platforms. An acquisition of The New York Times would greatly enhance the richness and reach of Google News. And should Google choose to invest in expanded news and cultural coverage, it could greatly enhance the richness and reach of The New York Times.
Finally, a Google acquisition of the New York Times would allow Kleiner Perkins (which would likely be assigned the task of finding new management for the paper) to attract people of great talent to a fascinating and challenging project: the reinvention of a great newspaper across multiple platforms and within a variety of applications. Even if the project failed, the knowledge gained from the undertaking would make Google a better, smarter, more deft information age company.
Not gonna happen. Google is a technology company. Yahoo! - more of a media company - balked at the concept of buying the Wall Street Journal a few years ago, a purchase that would have surely cemented Yahoo!’s place at the top of the perch in finance and business online.
Instead, Yahoo!’s on-again, off-again experimentation with content never produced an acquisition of WSJ parent Dow Jones.
So, does Yahoo!’s past actions suggest Google’s future actions? No, not at all. But while Yahoo! has in fact become a media company with technology roots, Google’s DNA and modus operandi is all about technology.
Technologists and their financiers don’t feel comfortable around content.
Google views itself as an enabler of content, whatever that means. Owning some content would run counter to their mission to organize all of the world wide web’s, I think. I could be wrong, eventually, if they continue to rack up earnings and fail to issue a dividend, there aren’t enough technology companies for them to acquire (proverbially speaking).
I personally think that content is king, and as distribution continues to fragment and become a commodity, content’s value will continue to rise.
It is perhaps for this reason that after a 2007 year that saw VCs invest heavily in video file sharing social networks and video ad networks, you are seeing former media executives (and not VCs) line up and raise hundreds of millions - if not billions - to scoop up content assets. VCs who buy content are exceptions, not the rule. It’s a shame, and their loss. I think their hellbent focus on tech explains their lousy investment record…
Media executives - not devoid of fault either - at least recognize that in an information age, those who own the content will end up building most value. Digital media is awfully like software: all incremental units of consumption are equal to profit, because distribution bears little cost.
It’s only a matter of time for content to rise in value. If the New York Times and Dow Jones of the worlds would have embraced the digitization of their content from the early days, they would have positioned themselves to be the ones buying the Google’s of the world.
But the fear of a digital reality caused them to turtle and demonstrate the bunker mentality that today has tied up most print companies in the ropes.
Digg this Blog
Share on Facebook
WatchMojo on Twitter
WatchMojo on YouTube
Add to Favorites
WatchMojo NewsletterWhen YouTube was dubbed 2006’s “invention of the year” a lot of people scratched their head because as great as YouTube is, an invention is was not.
YouTube combined Flickr with Delicious and applied it to video. You might note than Yahoo! had bought both Flickr and Delicious… yet it had not managed to pull off the coup. Adding insult to injury, Google bought YouTube for $1.65B in stock and today commands well over 50% market share in video.
Why is this important? Because when CBS bought Last.fm for $280M, it was a matter of time for CBS to try to apply Last.fm’s mojo to TV shows, sports, videos etc. and every other imaginable vertical possible. Not every vertical application will work, but one or two are bound to stick to the wall.
CBS gets some kudos for not delaying this. Turns out tomorrow they will be announcing something to this effect.
Related: Should CBS and Yahoo! Merge?
In an apparent jab at Sir Martin Sorrell and WPP, France-based Publicis Chairman Maurice Levy referred to his company’s partnership with Google:
“Google is not a short-term friend and a long-term enemy. It’s a real partner,” Levy said.
Google would exchange its technological know-how for Publicis’s analytical and media planning expertise.
Sir Sorrell has demonstrated a desire to position WPP as a leading new media force. Last year he acquired 24/7 RealMedia for $649M. That not only gave WPP an edge in the ad networking business, but also in search marketing, which is Google’s bread and butter.
Google, on its end, is being coy by saying that it is not targeting advertisers directly, but rather, trying to cooperate with ad agencies who historically have been and will remain gatekeepers to the $300B US marketing ecosystem, of which only $25B is spent online in the US, and of which Google commands roughly 40%.
Publicis, on the other hand, has not shown the inclination to dive deep into complimentary digital assets (despite the Digitas acquisition which was a digital ad agency), as WPP has. In addition to the 247 RealMedia acquisition, WPP has invested in Spotrunner (a 3% stake) as well as VideoEgg (in its Series D round).
It is unclear right now which strategy will pan out over time. With all due respect to Publicis, I think WPP is taking the better approach because over time all media will be procured online… and if ad agencies want to own and protect their marketing terrain, then owning seems smarter than partnering. However, Publicis deserves kudos for the more diplomatic stance, for WPP’s Sorrell might regret picking a fight with Google in a digital ring.
Time will tell, of course.
Related:
- Tech Meets Media: MSFT buys aQuantive; 247RealMedia scooped up by WPP
- Is WPP Over-Exposing Itself to UGC?
- Google vs. Major Ad Agencies
- WPP eyes Nurun: Quebecor Media vs. Quebecor World: A sign of things to come?
When we sold our company to IGN back in 2005 (not WatchMojo.com, my previous company where I was a VP), we had to do a lot of preparation work for due diligence and what not. Our CFO/controller in particular had a lot of work to do, and since the bulk of our revenues were generated from advertising, I had to run after a lot of clients to tie up loose ends.
That being said, I won’t pretend like the following is a tip I got or anything, but based on a seemingly innocent email I got, I think Tribal Fusion might be prepping for some kind of sale. When it comes to online ad networks that are always the subject of a merger or acquisition, Valueclick comes to mind. As a publicly traded independent ad network, Valueclick could very well be acquired one day by a wide range of players. But when it comes to leading private ad networks, there are many more, and the largest is Tribal Fusion.
I think Tribal Fusion has for some time been approached by private equity bankers, VCs, and would-be acquirers.
But I suspect something is up now… I’m not sure if it would be a merger/acquisition or an IPO, but given Tribal Fusion’s large reach, revenue base and operating history, I suspect it could very well IPO.
The timing is both horrible and excellent.
The timing is horrible because in case you have been hibernating, the bears are out and the markets are spooked. This morning the Dow fell 400 points in the first minute of trading. Thankfully the market has recovered but we’re still not out of the woods.
The timing for a Tribal Fusion deal however is excellent because last Friday, Slide raised a whopping $50M on a $500M valuation. The rationale (if we can call it that) was not that Slide was worth $500M as a widget maker/enabler, but rather, it was an ad network for slides… one day, maybe.
If that nutty rationale is the case, then it’s worth noting that Tribal Fusion’s paper value in this round at $550M was almost twice the final sale value of Blue Lithium to Yahoo! in 2007. It was also a bit under Yahoo!’s purchase price of Right Media.
Tribal Fusion is ranked 7th in terms of ad networks:
Yes, I know, Slide is very different from Blue Lithium and Right Media, but it actually makes money and is in fact an ad network… and not a speculative maybe-play on the hype that is social networking. I am not being critical of Slide at all, by the way, I am just saying that if Slide can command a $550M valuation for maybe being something one day, then by that logic Tribal Fusion’s bells might be ringing pretty soon.
After all, once you reach the people, then you can always change what you are reaching them with… this is sort of the strategy with WatchMojo.com’s syndication network. We distribute our video content everywhere. We don’t pretend to know what the future of video advertising will precisely look like… but as streams become monetized (just as search did in 2000-2001 or so) then the reach becomes far more valuable. That is the bet investors made on Slide… while that remains theoretical, Tribal Fusion is far passed the theory stage, at this stage.
