I just found this article on PC/TV. Even with the selloff I'm still pumped because we have one the best plays in this nascent industry.
The Red Eye tunes in
By Tony Perkins
Redherring.com
September 23, 1999
This week the Red Eye took a sweep through New York City to visit with top broadcast executives at CBS (NYSE: CBS), NBC, News Corp. (NYSE: NWS), and CNN. As one could imagine, they all had the Internet on their mind. After careful examination, the Red Eye flew home feeling pretty bullish on how well most of the studios are executing, and the potential of television and the Internet.
BROADCAST NEWS
NEW YORK CITY -- The Red Eye's experience in television has been as an on-air commentator. Having appeared on CNNfn's Digital Jam show for the past three and a half years, I have learned two very important things about the business. First, television is a linear experience for the viewer. That is, the viewer has to take in what a channel shoves in his face, and he can't flip around within a single program, like one can with a magazine or on a Web site, to search for additional information. The second lesson is that a good television programmer maintains viewers' interest through great content, production value, personalities, and characters. The goal, of course, is to keep your viewer's clicker from clicking.
Given that these two realities have been enshrined in the television business since its origins, it's no wonder that executives would be intrigued by the idea that the Internet could potentially be laced into a program and provide more sticking power for the producer. For example, a television watcher could use his remote to easily look up additional information over the Internet, viewed in a sidebar, to whatever program he is watching. And these sidebars of content could be sponsored, providing additional advertising revenue. The CBS/Viacom deal drives Internet brand power. NBC winks at interactive television.
Stay tuned for broadband on TV.
Well, we ain't quite at this point yet in the television market, but that hasn't been stopping the broadcast companies from making huge commitments to Internet service companies. The Red Eye met with Fred Reynolds, executive vice president and chief financial officer of CBS (soon to be Viacom [NYSE: VIA]/CBS) to hear his impressive story about his company's Internet plays. In the new media area, CBS has loaned its golden brand, broadcast, and promotion power to several leading content companies including CBS Marketwatch (Nasdaq: MKTW) and CBS Sportsline (Nasdaq: SPLN), and it is backing other Web services companies such as Jobs.com and Medscape.
And Mr. Reynolds believes that the $80 billion merger with Viacom will allow the companies to expand their Internet services deep into the younger generation, given Viacom's ownership of music franchises MTV, VH1, and Sonicnet, plus its children's entertainment network, Nickelodeon. As Viacom chief Sumner Redstone bragged at a press conference last week, "We will be a global advertising powerhouse."
TECHNICOLOR PORTFOLIOS
The standard deal CBS makes with startups doesn't usually include a cash investment, but an equity trade for advertising. By our estimates, in the cases of CBS Marketwatch and CBS Sportsline, CBS has turned roughly $60 million in equity for commercial trades into $700 million. Not bad for a noncash deal.
Not to be outpaced, NBC has been also operating on all 12 Internet pistons. By the Red Eye's calculations, NBC has made at least 28 minority investments in Internet companies. And so far, at least, NBC's roughly $40 million in cash and $40 million in promotion-for-equity investments are worth somewhere between $500 million and $600 million. And to really pump this portfolio full of steroids, NBC plans to spin out NBCi, which includes CNBC.com, Snap.com (60 percent ownership), and NBC.com, into an independent public company.
The real question is whether this flurry of investment activities by the major broadcast companies, and their cross-promotional power, will have a negative impact on pure online companies like Yahoo (Nasdaq: YHOO) and America Online (NYSE: AOL), which have remained independent. The Red Eye's guess is that they are going to give them a real run for their money.
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