CBS buying CNET for $1.8B.
Buyer X kicking Glam Media’s tires for a reported $1.3B.
Is it just me or does the frenetic pace of M&A seems to be accelerating?
Here’s why: for a few years, audiences were telegraphing their changing media consumption patterns to big media; now media buyers are being more vocal and more direct, first Viacom voiced the change, now it’s MSO.
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WatchMojo NewsletterNoticed the light blogging in the past couple of days?
Well, here’s why.
Interesting to see FB CEO Mark Zuckerberg say this:
“Facebook is a technology company … a technology company is a company that creates technology”.
I actually like Zuckerberg more and more for sticking to his own guns… but I am not sure how much of what he says is him and how much is his advisors and posse.
Anyway, I would not know the answer to that. What I do know, is this.
- on one side, you have technology, software and subscription licenses…
- and on the other, you have media, publishing and advertising.
Both can be tremendously successful and valuable. In the 1970s, 80s and 90s technology outperformed media mainly due to the PC and its requirements and growth.
But in the 2000s, free technology on the Internet has outperformed traditional technology because of a new medium, the Web, and the rapid rush of new audiences and migration of advertisers.
Google managed to leverage its technology to build a business around what’s on the other side of the fence because of its timing.
No other company has or will do that, probably ever again. Why? Google envy. Googlegrew so profitable so fast that no one will ever let such a thing happen.
Facebook IS worth a lot, but it will never be the next Google because media companies can generate $15B in advertising revenue, not technology companies (let alone social networking companies).
In fact, is Google a technology company alone? It could be argued that it is the single example of a perfectly balanced technology-media company.
Glam Media - a company that reaches some 35M uniques via the Glam.com property and its network of blogs and like-minded web properties - is the latest to join our syndication network.
Check out the press release here,
Glam Media, Inc., (http://www.GlamMedia.com), the pioneer of vertical content networks and number one in reach for women online with 35 million uniques in the U.S., today announced the launch of the GlamTV Platform, a video distribution and advertising platform for Glam’s network of 500+ premium web sites and blogs. The GlamTV Platform is a flagship service that allows Glam package its content with ads for hyper-targeted audiences (…)Glam Media's publishers can access premium Indie video content such as: interviews with real-life fashionistas from BeautifulStranger.com; the best in fitness content from ExerciseTV.tv; cutting-edge entertainment reporting for the urban audience from Kevin Frazier's HipHollywood.com; expert advice and green-living tips from Howdini.com; social video content and interviews from MOLI.com; premium short-form episodic comedy, original scripted series, and musical performances from Safran Digital Group; lifestyle videos from UK-based Simply Media; smart videos about relationships from TangoMag; video horoscopes from Tarot.com; vintage fashion footage from VIDCAT.com; useful infotainment from VideoJug.com; and international fashion and travel content from WatchMojo.com. Premium videos at launch are available in Fashion, Beauty, Shopping, Celebrities, Entertainment, Living, Health and Wellness Channels.
That’s 35M more uniques that our content just reached, in one deal.
Check out some of our content on Glam here. Arguably more interesting than this video launch is the fact that VentureBeat reports Glam just snubbed a $1.3B offer. Not sure who the would-be buyer would be, but I estimate one of the following players:
- Hearst
- Conde Nast
- Burda Media (an investor who just led the recent big funding, so less likely)
- etc.
Just because CBS just plunked down $1.8B to acquire CNET does not mean that the company is tucking away its checkbook, apparently.
If anything, it means CBS is getting serious about the web, and video in particular.
Bambi Francisco sits down with former Yahoo! corporate development executive and current VP of Corporate Development at CBS Mike Marquez to talk about the kind of companies CBS is looking for and how to best approach his firm.
Good interview here.
Massive broadband penetration and changing user habits spell a billion video consumers by 2013, up 4x from today’s levels.
If complementary product lines is one consideration in successful mergers, another one might very well be a shared set of values and a vision to tackle the future challenges and opportunities facing an organization.
In that context, I am thinking that maybe CBS/CNET and NYT/About.com would make for good merger buddies. I will give this some more thought… but this is a potentially interesting merger not only because of the fits in terms of content and media, but also because both management teams seem to be opening up their data more and more.
If the NYT is indeed about to open up its content via APIs, then NYT is essentially about to do what CBS has started to do with some of their video content. Of course, Web 1.0 (1994-2003) hammered print media companies, and I think Web 2.0 (2004-present) is nailing TV-centric media companies… which explains why TV-centric media companies like News Corp., CBS, Disney and NBC are displaying schizophrenic and multiple personality disorders: on the one hand, they want their content everywhere, but they fear giving up control so the two sides of their brain don’t seem to get along (forget their limbs!)
Anyway, what is also interesting, frankly, is that apart from visions to open up, the content starts to fit well:
- NYT/About.com and CBS are very news, sports, entertainment and lifestyle oriented,
whereas
- CNET is extremely tech-oriented.
This would mesh well across media.
- NYT.com, CNET and About.com are actually pretty strong online,
- CBS is extremely strong in TV, radio and outdoors. It lacks print (it does own Simon & Schuster, the venerable publishing house) but it can certainly cross-promote talent well.
Of course, this would not be a merger per se, rather, an acqusition. CBS just paid $1.8B for CNET and combined that would be worth $15B.
NYT is worth some $2.5B… but with shareholder activists, bigger media companies and hedge funds gunning for the company, would a sale to CBS for shares and or cash be so bad? I don’t know. It would help the Sulzbergers find a home at CBS. Incidentally, the Sulzbergers are otherwise looking at landing at Rupert Murdoch’s News Corp., who last year bought Dow Jones, publisher of Wall Street Journal and Barron’s for over $5B. We can see the Rupert Murdoch vs. Sumner Redstone rivalry escalating before our eyes…
I am not sure if this will happen… but crazier things have happened.
Today is Sunday. I sure wish I could hop in my car, drive to the ballpark and catch the Montreal Expos. Problem is, it won’t happen. It can’t. That train long left the building. The only way it might happen is if I come across over $500M to buy a franchise and build a new ballpark. Even then, I need to move fast because in a decade, baseball will be a footnote in this city’s history.
How on earth does this relate to the search marketplace? Just because one might desire something does not mean it will happen.
Everyone agrees that it’s good to have some kind of competition against Google’s march towards a checkmate situation in search (on the desktop). The problem is, it’s too late.
#1 - We’ve already explained why Google was a one-in-a-million, perfect storm, lightning-won’t-strike-twice kind of business case.
#2 - We’ve also expressed why search startups - including our own MetaMojo.com, but thinking mainly of others suck as Haika, PoweRset, Mahalo, Eurekster etc. - will have very hard times. Mainly: an economic and user behavior-driven impossibility to gain distribution. And second, their only lifeline to survival is a deal with, you guessed it, Google.
A Better Mousetrap?
In search, the history has been quite simple.
2005 Buzzword: Vertical search;
2006 Buzzword: Social search;
2007 Buzzword: Natural language search;
Yet the result in 2008 remains the same: Google is stronger than ever without really banking on any of those trends.
When we built MetaMojo.com, it was a bet first on the theory of vertical search. Basically, you search for Madrid, you should get the best results from best-of-breed travel sources; you search for prostate cancer, ditto health sources.
The first problem? Distribution
No one would leave Google to search on MetaMojo.com (that was not surprising). So we initially launched a myriad of blogs (which became the BloggerMojo.com network) in order to showcase the search results and convince other bloggers to use it, too.
The second problem? Economics
You cannot possibly expect to survive by being in both the content and search spaces, each one deserves its own focus. Incidentally, another unit of ours in content - the WatchMojo.com video property and mainly, syndication network - took off, reducing our own appetite to have our asses kicked by Google/Yahoo/Ask/MSFT.
Of course then, the idea was then to have other blogs do this, not only have our blogs feature MetaMojo.com.
The problem? Google comes with a built-in monetization engine, too… meaning that no site operator in their right mind would pick us over Google. Our strategy (I won’t get into it all) was to then layer a set of personalization and social media bells and whistles. We didn’t, because then Jimmy Wales’ Wikia began to make noise and despite the challenges it would invariably face, I made the decision to focus 100% on WatchMojo.com and leave search for the major players with VC-backed resources.
Monetization is moot if you don’t have distribution: an audience and thus, search volume. This is why MSFT wanted to buy Yahoo!, because it could hit 30% market share, a threshold at which you can become a meaningful player in the market.
Of course, bear in mind that once you have distribution, it’s very easy for one of those Big Four to simply emulate the one bell or whistle you have. Within months, Google launched Co-op which basically gave no site or person to even consider using MetaMojo.com.
The End Game for Google Competitors Remains the Same
MetaMojo.com was always a toy while WatchMojo.com launched… I still think that we could have built a very solid vertical search product with considerable social media attributes but the problem is, even had MetaMojo.com been able to get off the ground, ultimately, the end-game ain’t pleasant. How do I know? A bit of revisionist history?
Nope. Let’s look at one of those wanna-be search competitors, Eurekster.
Eurekster essentially did what I wanted to do in the distribution sense: getting sites to use it. The problem is, even with a number of sites using it, it’s now in the deadpool. I am not sure how long it will remain in the deadpool… but ultimately, Google has built a perfect 1-2 combination punch that proves lethal in that it has locked up distribution and monetization in search, desktop search, that is.
Indeed, Google is the 21st century version to Microsoft and Standard Oil (and it very well might be more valuable soon). But I don’t see a problem, personally.
Sure, an argument could be made that Google (search product) and AdSense/AdWords need to be spun off to create a healthy and competitive market. I am not sure that argument is fair. But that’s another issue.
A Brave New World: Mobile,Wireless Search
Wireless is the biggest pile of hype before/after social networking (before in terms of chronology, after in terms of rank)… when it comes to advertising-supported business models.
However, wireless presents a brave new world, a new frontier, so to speak, for search. The one area where Google could become an after-thought, frankly, is in wireless search.
As such, when Mahalo raises $16M, or PoweRset gets all of this hype (when others like Cognition seem to be doing more, for longer periods of time), etc., I wonder, why bust a nut over something that is already over… why not put all of those resources in wireless (in fact, Mahalo might be scaling, but it’s scaling in the wrong direction).
Then again, maybe mobile search is also a big pile of hype, too?
I doubt it. I say right now video is the killer app, but the idea to search anything at anytime on a wireless devices and get the info I need is arguably a bigger killer app than video…
Facebook platform’s turns 1. Here’s my post from last year.
Reading all of the non-news stories about Twitter this year, I can’t help but think about Facebook last year.
The two companies have a few things in common.
Last year, a lot of the bloggers and tech journalists were writing about Facebook; this year, it’s Twitter.
Last year, a lot of analysts were wondering about the business model of Facebook; this year, the questions are being asked over Twitter’s model, especially in light of the recent $15M funding round done at a nosebleed $80M valuation.
Both companies have also adopted the platform approach: Facebook’s developer programing turning 1 this week; and Twitter’s API having spawned many derivative products.
Both companies also suffer from Google envy in one way or another (that merits a separate post), insofar as both are desperately trying to conceive (in Twitter’s case) or develop (in Facebook’s case) ad-based business models for a brave new world. The problem is that both companies have predispositions that make them far better e-commerce platforms than advertising plays… but because VCs are gaga over Google and envious of advertising models… then guess what, the management teams are barking up the wrong trees.
Don’t take it from me. Go with history. Both companies (at least Facebook) point to how MSFT became an operating system that others built on, fair enough, granted. But last time I checked, MSFT’s record in ad-supported businesses are abysmal. MSFT’s cash cow are transaction-based (licenses, subscriptions, etc.) - things that are similar at least conceptually to e-commerce. Of course, e-commerce does not have the same margins or sex appeal as advertising…
All to say, if either company wants to have a shot at being relevant in the advertising business (which remains the biggest opportunity and market out there given the size of global advertising at $500B with online not even at $100B), then both companies need to stop worrying about APIs, platforms and go back to the drawing board.
Don’t get me wrong: Facebook is a fantastic company, like many I have lots of respect for Mark Zuckerberg and his backers and board are second to none… however, if Facebook and Twitter want to become technology companies, then they need to realize that Google remains the only successful ad-supported tech business and Google’s core offering is conducive to advertising; Facebook and Twitter are anti-advertising at their core. Nothing will really change that.
Ironically,
1- Not only has Facebook largely missed the bull’s eye with its API (and don’t even get me started with Twitter),
2 - but I would say that any company that has a strategy that revolves around Facebook or Twitter is even more of an clown. But that’s just me.
On #1, yes, Facebook has grown since the launch thereof, but the amount of extra crap has ensured that most advertisers won’t come close to Facebook with a 10-foot pole, but it has also made Facebook less desirable to some/many users. I probably log in to Facebook once a week now, compared to 5 times a week before.
On #2, yes, Facebook (like MySpace, YouTube, etc.) brings a flood of eyeballs to companies, but do you want your future to be in the hands of a bunch of VCs waiting for that paper $15B paper valuation to bear fruit? I wouldn’t.
Anyway, here’s my post from last year when the Facebook API launched.
