It’s way too premature… but if CBS/CNET take TV.com (one of the many URLs CBS inherits by way of its $1.8B acquisition of CNET) and delivers on 25% of its promise, considering all of these assets, then I think TV.com can become the next great online video property. This is extremely premature and assumes that traditional media (CBS) and big, new media (CNET) don’t drop the ball, make synergies happen, integrate wisely, blah-blah-blah… but again, at 25% of its potential… I do not see how TV.com cannot become something worth talking about… Just look at all of this, from the official press release:
Technology: CNET.com is the number one Web site in the computer and consumer electronics category, reaching more than 18 million people every month with daily premium content offerings. From the latest product reviews to breaking news from the digital world, as well as video and program downloads, CNET.com has become the leading destination for people looking to navigate today’s digital world.
Entertainment: Representing the third largest online entertainment group on the web, the collective reach of CBS Interactive’s entertainment portfolio will now exceed 24 million users each month, and include many of the leading brands on the web today, including: TV.com, CBS.com, The CBS Audience Network, theInsider.com, GameSpot.com, Last.fm, and CHOW.com, among others. These are among the most visited entertainment destinations on the web today, each with their own identity and audience profile, and they continue to grow in users and time spent visiting. This past year, for instance, CBS.com market share grew a category-leading 41 percent. Combined with the power of America’s most watched network – CBS Television – CBS Interactive offers unparalleled consumer reach online and offline.
Sports: CBS Interactive is a leader in athletic coverage, from sites devoted to professional sports to the largest collection of collegiate brands. Among its top destinations are CBSSports.com, CBSCollegeSports.com, NCAA.com, and MaxPreps.com, representing one of the digital world’s largest sports footprints. Working with its leading broadcast and radio properties, CBS offers the unique opportunity to reach a wide group of people who are passionate about sports across the internet, television and radio.
News: Two of the strongest news sites in their own right, CBSNews.com, a leader in world news, and CNET News.com, the leader in technology news, combine to create the sixth largest property in the Current Events/Global News category. From breaking news and international reports to coverage of business, politics and technology, the combination of these two destinations gives users a global perspective they cannot find anywhere else.
Business: Eighteen million users each month have come to rely on CBS Interactive’s business properties, which include BNET.com, the cornerstone of the business category, and leading sites like ZDNet and TechRepublic. Collectively, these assets are among the fastest growing destinations in the expanding business category and offer users the latest and most insightful business coverage, with unique perspectives on management and technology.
And given the $1B valuation bestowed on Hulu (given the 10% equity sale for $100M) and $1.65B that YouTube fetched… I cannot understand how TV.com should be anything less than a $1B business in 2 years. Why 2 years?
- YouTube went from “domain registration” to “liquidity event” in 2 years.
- Hulu went from an idea on a napkin to a $1B valuation in 2 years…
It won’t be easy… and despite CBS’ offline TV mojo and all of the video efforts of CNET, there’s plenty of work to be done, but it surely can be done.
Will it? I don’t know… I don’t anyone knows. Well…
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WatchMojo NewsletterBy and large, for traditional media companies to penetrate the Top 10 Rankings of Largest Media Properties, the cost of entry seems to be $2B, give or take a few hundred millions of dollars.
We already covered this for News Corp., who spent just under $2.5B to get to where Fox Interactive Media is now:
- MySpace parent Intermix: $580M
- IGN (my former employer): $650M
- Scout: $60M
- Strategic Data: $?M
- Photobucket: $250-300M (reported, but unofficial)
- Flektor: $15-20M (reported, but unofficial)
and by the looks of it, the tally is the same for CBS.
SAI has more on CBS’ rise to become a Top 10 media property, powered by the CNET $1.8B deal, as well as the $240M Last.fm deal. Any more up CBS’ sleeve? Time will tell. Interestingly both companies lack search - though I am not search if search is something traditional media wants to own. One other area where they could use some strengthening is online video… but I am biased there.
CBS is broken up into
- Technology
- Entertainment
- Sports
- News
- Business
Again, pardon my bias as a lifestyle publisher, but CBS also seems light in Lifestyle which is arguably bigger in terms of sheer client interest. Connecting the dots: when IGN bought my former company AskMen, it was to complete the 18-24 and 18-34 demographic amongst men, but it was mainly to complement its categories (IGN was strong in games, movies and technology but non-existent in lifestyle). I could be dreaming, but I am sure when IGN repackaged itself and sold to News Corp., it leveraged AskMen to convey its strength in lifestyle.
Interestingly, CNET has a few cooking and food properties and if my memory serves me right, they lured a former Maxim executive, so time will tell if they bolster that category as well.
Of course, this does not include the $5B News Corp. shelled out for Dow Jones, whose WSJ.com is indeed a crown jewel online and off.
Hum… thank God the press release sounds grandiose, and groundbreaking, because reading that
In September, Seth MacFarlane, creator of “Family Guy” on television, will unveil a carefully guarded new project called “Seth MacFarlane’s Cavalcade of Cartoon Comedy.” Unlike “Family Guy,” which is broadcast on Fox, this animation series will appear exclusively on the Internet.
The innovative part involves the distribution plan. Google will syndicate the program using its AdSense advertising system to thousands of Web sites that are predetermined to be gathering spots for Mr. MacFarlane’s target audience, typically young men. Instead of placing a static ad on a Web page, Google will place a “Cavalcade” video clip.
So Seth will be partnering with Google to distribute and monetize videos using AdSense. I could not help but think: hmm… why does this sound familiar.
MONDAY, AUGUST 7, 2006
Google has struck a deal to allow Web site owners to put video clips from Viacom, including “SpongeBob SquarePants” and MTV’s “Laguna Beach: The Real Orange County,” on their pages. The clips will be accompanied by advertising, with Viacom, Google and the site owners dividing the ad revenue.
Viacom, one of the biggest creators of television programming, is giving a significant endorsement to Google’s ambitious plan to become a big player in video advertising.
The deal also may be a sign that Google is getting better at dealing with the producers of news and entertainment, which have sometimes alleged that Google used their content without appropriate consent and cooperation.
After the test with Viacom, to start at the end of this month, Google hopes to allow any video programmer to use its system to distribute programming with advertising. It also plans to add advertising-supported programs to its own video site.
The deal allows Viacom to extend the reach of its video programming to a host of new sites.
You get the idea. There’s nothing new with this deal, announced today, that Viacom and Google did not try to accomplish two years ago.
As a video content provider to Google’s YouTube, I hope this works… but this seems like more of the same, just rehashed, of things that have been tested and not worked.
Am I missing something?
Yesterday the NY Times wrote an article mentioning that no VC-backed firm did an IPO in Q2 2008. I observed that VCs were basically becoming useless by backing largely useless companies. I was not alone, the main argument was leveled by VC Paul Kedrosky.
A reader of this blog echoed the same thing, and today, the last major IPO to hit the tech space - Google - shows why we go eons between IPOs:
I left [Google to back to MSFT] because Microsoft turned out to be the right place for me.
First, I love multiple aspects of the software development process. I like engineering, but I love the business aspects no less. I can’t write code for the sake of the technology alone - I need to know that the code is useful for others, and the only way to measure the usefulness is by the amount of money that the people are willing to part with to have access to my work.
Sorry open source fanatics, your world is not for me!
Google software business is divided between producing the “eye candy” - web properties that are designed to amuse and attract people - and the infrastructure required to support them.
Some of the web properties are useful (some extremely useful - search), but most of them primarily help people waste time online (blogger, youtube, orkut, etc).
All of them are free, and it’s anyone’s guess how many people would actually pay, say $5 per month to use Gmail. For me, this really does make the project less interesting if people are not willing to pay for it.
This orientation towards cool, but not necessarilly useful or essential software really affects the way the software engineering is done. Everything is pretty much run by the engineering - PMs and testers are conspicuously absent from the process. While they do exist in theory, there are too few of them to matter.
On one hand, there are beneficial effects - it is easy to ship software quickly. I’ve shipped 3 major features (a lot of spell checker and other stuff in the latest Gmail release, multi-user chat in Gmail, and road traffic incidents in Google Maps), and was busy at work on my fourth project in just a year. You can turn really quickly when you don’t have to build consensus between 3 disciplines as you do at Microsoft!
On the other hand, I was using Google software - a lot of it - in the last year, and slick as it is, there’s just too much of it that is regularly broken. It seems like every week 10% of all the features are broken in one or the other browser. And it’s a different 10% every week - the old bugs are getting fixed, the new ones introduced. This across Blogger, Gmail, Google Docs, Maps, and more.
This is probably fine for free software, but I always laugh when people tell me that Google Docs is viable competition to Microsoft Office. If it is, that is only true for the occasional users who would not buy Office anyway. Google as an organization is not geared - culturally - to delivering enterprise class reliability to its user applications.
The culture part is very important here - you can spend more time fixing bugs, you can introduce processes to improve things, but it is very, very hard to change the culture. And the culture at Google values “coolness” tremendously, and the quality of service not as much. At least in the places where I worked.
Since I’ve been an infrastructure person for most of my life, I value reliability far, far more than “coolness”, so I could never really learn to love the technical work I was doing at Google.
The second reason I left Google was because I realized that I am not excited by the individual contributor role any more, and I don’t want to become a manager at Google.
Read more on the why I left Google to go back to MSFT here.
Learning about the Facebook share sale by employees (see our previous post: Facebook Share Sale Highlights Shortcomings of VC Tactics), I wondered why Facebook never introduced two main clauses in the shareholder agreements.
Piggy Back Rights and Drag Along Rights. Depending on the shareholder agreement in question and how it is defined, the rights alter a bit, but ultimately, the idea is that any offer to any one shareholder must be matched by an offer of similar and equal value and terms to all other shareholders.
The Drag Along allows a majority shareholder to enforce minority shareholders to be dragged along so that they don’t drag their heels and waste the big shareholder’s time, basically.
The Piggy Back allows a minority shareholder to be entitled to receive an offer of similar value if the majority shareholder(s) are made one.
In Facebook’s case, there very well could have been such rights included, but they might have been defined differently with regards to class of shares.
More:
Reading that NBC will restrict coverage of the Olympics to NBC properties, I wonder if this will cause a rift between News Corp. and NBC.
The two companies are 50-50 joint venture partners in Hulu. In all likelihood: Hulu will want access to the coverage (which NBC is only making available after it has been aired on TV, and only making it accessible on NBCOlympics.com), but while NBC and News Corp. became bosom buddies to confront and answer the YouTube threat… over time, let’s face it, media companies have a tendency to stab one another in the back. I’ve always said that YouTube and Hulu are not really competitors and Hulu’s main obstacle from success will be NBC and News Corp.
If you think about it, the News Corp. side of Hulu’s lineage will be pushing NBC to make the Olympic Games available on Hulu asap whereas the brass at NBC will say “not so fast”.
What will happen? I don’t know… but something tells me that Hulu’s head honcho Jason Kilar will be fielding calls from both Jeff Zucker and Peter Chernin all night long as we head into the Summer Games in Beijing.
And sure, I might be getting calls asking me to stop stirring shit up… but until then, it’s worth speculating.
Of course, the most likely outcome is for NBC to simply grant Hulu the content a few days after the coverage has aired on TV and on NBCOlympics.com, but until we get that confirmation… it’s pretty interesting to consider the likely outcome.
Disclaimer: WatchMojo.com provides content to Hulu. Here’s our page. See our previous post tonight: It’s NBC’s Content, No?
I love nothing more than to blast traditional media, the technology bellwethers and the VCs that back them… but sometimes I think the media covering them goes overboard.
Take for example the reaction by some very respected members of the media surrounding NBC’s policies for coverage online for the 2008 Beijing Games. Sure, it is restricted and definitely not as viewer-friendly as viewers would like… but why should everything be given away?
I won’t make too many friends amongst the hippie love crowd… but here’s some wild, crazy, revolutionary thinking for y’all: if NBC is forking over billions to have the rights for the Olympics Games, should it not decide what it can and cannot do with those rights?
So it wants to air content on the Web after it airs on TV… can you blame them? TV is a $75B ad market, the Web is a $20B market as a whole, with video being a $1B market.
Don’t get me wrong: I am all for free, ad-supported content… but I can bet you that had NBC decided to make everything for free, on-demand, in real-time but had the audacity to air pre-rolls, we’d be having a cow over that, too.
No? Don’t lie… This is why the licensing model will give a run to the ad-supported play, not because it’s optimal, but because viewers have been conditioned to avoid video ads, where we’ve yet to even anoint a standard.
I also totally get why they want to restrict video to NBC properties. It’s not what we do at WatchMojo nor is it what many media are doing… but again, there’s an element of scarcity at play here and I think it’s folly to overlook it. Read more on this is “Does the law of diminishing return apply to content is king and ubiquitous distribution?”
Bottom line: no, it’s not what users want… but users want everything for nothing.
What NBC is doing is actually pretty progressive… especially when you consider how restricted things were in 2004 and 2006. What they are allowing in 2008 is net-net a step in the right direction, and this is obviously because the Olympics come every two years (alternating between Summer and Winter) which is an eternity online… just imagine where they might be in 2010 for Vancouver.
But reading some of the reactions online, you would think that NBC is being lambasted for deciding to run the stuff on their websites and on their terms… it’s like “hey man, just put it up on YouTube… and pass the bong”.
Part 2: Will Beijing Come in Between NBC and News Corp. and Cause Rift over Hulu?
I hate to post my third anti-VC rant in two days… but upon learning that some former Facebook staffers are looking at unloading some of their vested shares at a value of $3-4B (when supposedly Facebook locked in a $15B value earlier this year), it sort of reiterates my whole argument for providing liquidity preferences to founders, and in some exceptional cases, executives and employees, too. Read more in Bulls Make Money, Bears Make Money, Hogs Get Slaughtered.
Trust me, if you surround yourself with the right talent, cashing in some of your chips definitely does not make you less hungry for success… it just makes you more patient for it.
But, VCs go through their box of deceitful cliches to lock in talent and vest shares rigidly in the hope of retaining hungry employees and luring them into a bigger payoff when all they do is end up looking like jerkoffs. Oh, look, it rhymes.
But ask yourself how effective it is to invest money in a company and not let anyone take any money off the table, only to realize that some former Facebook staffers (who probably left because Mark Zuckerberg had no desire to sell any time soon) are cashing in their chips for 33 cents on the dollar? Way to go geniuses. No wonder your batting average is in the toilet.
SAI and TechCrunch have more on this seemingly unbelievable story. In the broader landscape, I personally think that Facebook is surely worth something, but $15B? We all know that was MSFT agreeing to that in order to you-know-what block Google from the deal. But the reason why Facebook board member Peter Thiel pushed for such a lofty valuation wasn’t just greed to push up his investment in the social networking site, but because he knew that the Ponzi scheme effect would also push up the value of his investment in Slide… which is basically valued as a function of Facebook.
There’s an expression in investing that says “sell in May, go away”. Well, ever since I got into trading regularly (2003), I wanted to do just that… but every year, May came and went I stayed in the market.
This year, seeing Yahoo!’s crazy handling of the MSFT offer, I decided to sell everything and leave the market: I got tired of seeing douchebag executives trample over shareholders’ rights.
I’m glad I did: U.S. Stocks Tumble, Sending Dow to Worst June Since Depression.
Good timing.
Bob Parker would be proud, I tell ya.
Yahoo! just lost another “key exec”, claims Tech Crunch. This time, some M&A guy named Kent Goldman. If you are an M&A executive at Yahoo! now, you get more deal flow than… The point is: no one in their right mind is looking at selling to Yahoo! Why? Because no one was rushing to get on the Titanic once it hit theat infamous iceberg.
Furthermore, Yahoo! isn’t in the market to buy anyone, because they are too busy with doing a re-org every month… oh, they’re also getting in and out of markets on the turn of a dime.
What makes this really ironic is that a lot of people - namely VCs looking to flip otherwise useless and exitless startups - were against MSFT buying YHOO because it would lead to one less buying party.
This, I thought was nonsense, because when a company that is not strong in an area (MSFT/Web) buys a company that is strong in one area (Web, allegedly) but lacks financial firepower (cash, strong stock) then the buying party uses the selling party as a platform to buy more companies.
In other words, MSFT has the cash but not the slightest clue what to do with some companies… whereas YHOO lacks the cash but has a clue (all right, maybe not anymore) about what to do with web startups.
All things being equal, adding a small web startup to MSFT is not as bright as adding a web startup to YHOO because YHOO is more of a pureplay Web company whereas MSFT is a software firm first and foremost just trying to find its bearings online.
In fact, I could be wrong, but I see CBS using CNET to make more acquisitions for largely similar reasons. CBS is a great media company - albeit a traditional one where its audiences are getting too old for marketers to care about - in shrinking business segments. Sure, it bough Wallstrip, Last.fm and a few other such companies… but it cannot get all that aggressive with your typical Web startup. Having however spent $1.8B on CNET, it can now use its balance sheet and cash flow to leverage CNET’s audience and more Web oriented business nature to make more acquisitions.
Indeed, we’ve seen this before: when News Corp. bought MySpace and IGN, it did not clam up and put away the checkbook, subsequently buying up Photobucket, Flektor, Strategic Data Corp. and a number of other companies.
The CBS example is fitting, by the way, because Goldman is the second Yahoo! executive to leave the company; Mike Marquez left YHOO to join CBS. I am pretty sure that he’s seen more M&A activity at CBS in that timespan than Yahoo! has.
But of course, in the near sighted world some people live in, MSFT buying YHOO was a bad thing. Tell that to YHOO stockholders who are today holding a stock that is 50% lower than where it was a month ago, before Yang et al. totally sank the company…
