Matthew Ragas (Ragingbull) mentions ACTV in an article on Murdoch:
Liberty Digital (TUNE), a newly formed Internet investment vehicle controlled by
Liberty Media, has the rights to develop 12 interactive television channels to
be carried over AT&T's (T) cable systems. James Murdoch, Rupert Murdoch's son
and president of News America Digital Publishing, recently stated that News
Corp. is working with its "programming partners" to create interactive
television services. News Corp. is cutting broadband content deals with
ExciteAtHome, RoadRunner and others because it desperately needs distribution.
Liberty can provide that. Not only does Liberty Media control valuable AT&T
cable system rights, but Liberty also has a minority stake in ACTV (IATV), a
developer of interactive and personalized television services. I find it more
than a coincidence that one of ACTV's first programming partners is
FoxSportsNet. Watch, Murdoch and Malone, as well a number of their various
Internet investments, will break bread together in the near future.
That was the actv mention, here is the article FYI::
Subj: Raging Bull's Cyberstock Investor Report - July 16
Date: 7/16/99 5:05:49 PM Pacific Daylight Time
From: ragingbull@um2.unitymail.com (ragingbull)
To: ragingbull@um2.unitymail.com (ragingbull)
THE RAGING BULL'S CYBERSTOCK INVESTOR REPORT
"Your Weekly Internet Stock Newsletter"
July 16, 1999
"Now Read By Over 140,000 CyberInvestors Weekly"
Editor: Matthew W. Ragas
ragingbull.com
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***RAGAS SPEAKS FOR THE WEEK***
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Crazy as a Fox
Are there any Web naysayers left today in the off-line media world? I strongly
have my doubts. Just look at the frantic string of Internet related investments
and deals made in the past few months by CBS Corp. (CBS), Walt Disney (DIS),
General Electric's (GE) NBC, New York Times Co. (NYT), Viacom (VIA) and others.
The list goes on and on. Faced with a sharp dose of reality, every traditional
media company now appears desperate to transform its off-line businesses into
Web-centric operations. And I mean everyone.
Even one of the Web's previously sharpest critics, News Corp. (NWS) Chairman
Rupert Murdoch, seems to be whistling a different tune about the Web these days.
Let's not forget that it was Murdoch who previously stated that the Internet
would "destroy more businesses than it creates." Apparently, Murdoch has now
come to the conclusion that while his previous statement may be true, the
Internet may in fact dislodge and eventually destroy a large portion of News
Corp.'s off-line media holdings in the process.
Judging by News Corp.'s latest moves, it appears that Murdoch has finally come
to the conclusion that it is better to have the reckless and hyperactive
Internet as a close friend than a dire enemy. After all, trying to work against
the hyper-change the Internet has spawned in countless off-line industries would
be ludicrous at this point. With this in mind, Murdoch recently told British
newspaper The Sunday Telegraph, "I don't understand the technology, and I never
will. But you don't have to. You have to understand what it can do for you.''
I agree. Murdoch doesn't have to ever understand the technological side of the
Net, he just needs to surround himself with people that do. To be fair to
Murdoch, I can understand some of his previous distaste for the Web.
Murdoch's past plate of Internet stocks
Not many remember that back in 1993 it was Murdoch's News Corp. that purchased
Delphi, the first online service to offer full access to the Internet. Delphi
eventually helped launch a variety of Web sites for News Corp.'s Fox channels.
However, at the same time, increased competition from Compuserve, Prodigy (PRGY)
and America Online (AOL) ate into Delphi's existing subscriber base and Delphi's
losses continued to mount. Frustrated with continuing to have to plow cash in
Delphi, Murdoch unloaded the company to some of its original management team in
1996. As one can see, this was not exactly the kind of first-time Internet
experience for Murdoch that would endear him to the Web.
On the plus side, Murdoch could have been involved in an even bigger potential
Net money pit with "push technology" pioneer Pointcast roughly a year later.
It's bad deals like those that could have given a media giant like News Corp. a
permanent cyber-stomachache for anything Net-related. Widely circulated rumors
suggest that News Corp. approached Pointcast executives back in 1997 willing to
offer them roughly $450 million to acquire Pointcast. One must recall that back
in 1997 push technology was heralded as the Net's next big thing and that
Pointcast was one of the Web's hottest companies at the time, bar none. Looking
back, Murdoch should have thanked his lucky stars that Pointcast turned down his
generous offer. A few months ago, after a variety of failed mergers and IPOs,
Pointcast was finally purchased for a fire-sale price of $10 million in cash and
stock by Internet incubator idealab. News Corp. definitely dodged a bullet by
not getting sucked into the Pointcast fiasco.
In the past two years, investors have watched portals like Yahoo! (YHOO),
ExciteAtHome (XCIT) and Lycos (LCOS) grow into powerful media companies. While
Time Warner (TWX) has tried and failed at building its own super portal in
Pathfinder, News Corp. has kept an especially low profile on the Web. Murdoch
clearly has no intention to build his own Fox-branded portal site. Instead, Fox
spouted the well used traditional media rhetoric that it would instead
concentrate on building "vertical sites" geared around existing programming.
However, up until a few weeks ago, I felt that Murdoch's conservative
Internet-oriented moves showed that News Corp. really didn't have any long-term
strategic plan for the Net. I was wrong. The pieces of the Internet strategy
puzzle for Murdoch seem to finally be falling into place.
Let's take a closer look.
Cobbling together an Internet strategy
Broadband distribution deals: In February, Fox unveiled a broadband content
agreement with Time Warner's high-speed cable Internet service, RoadRunner. As
part of the agreement, RoadRunner agreed to carry a variety of video and graphic
intensive programming from Fox sites like Fox Sports and Fox News over its
service. In late April, Fox announced that it had struck a similar multi-year
broadband content deal with high-speed cable service ExciteAtHome. Look for
Murdoch's next move to be a variety of broadband content deals with some of the
Baby Bells and satellite providers. Murdoch's primary Web play appears to be in
leveraging existing off-line programming assets, which are video oriented in
nature, and proliferating that content on the Web. To do that, he needs "fat
pipes" and that means content distribution deals with every broadband service in
creation. Stay tuned.
Build a portfolio of content-driven Net companies: While many traditional media
companies and Internet venture capitalists are betting their chips on Net
infrastructure and e-commerce plays, News Corp. is staying focused on backing
content oriented Net companies. This makes sense to me, since Fox has its roots
in the programming and content creation world. To jump start News Corp.'s Net
investment activities, Murdoch formed a separate $300 million Internet venture
firm called ePartners back in April.
To date, News Corp. holds minority stakes in financial news site TheStreet.com
(TSCM), free e-mail provider Juno Online (JWEB), community site sixdegrees.com,
and e-pharmacy and health care site PlanetRx.com. EPartners also recently made a
minority investment in W.R. Hambrecht + Co., a fledgling online investment bank.
The Hambrecht connection could become especially useful in the future as a
cost-effective means for Murdoch to take various components of his growing Net
portfolio public.
Partner with existing Net investment veterans: Three weeks ago News Corp.
announced that it would form a joint venture with Japan's Softbank to invest in
Internet companies looking to launch services in the U.K., Australia, New
Zealand and India. Softbank is undoubtedly one of the Web's most well known
venture investors and holds stakes in over a hundred Internet companies ranging
from E*Trade (EGRP) to Yahoo. The new venture will be called eVentures and will
be initially capitalized with $50 million. EVentures is not wasting any time
sprinkling its cash into the coffers of Net startups. Already, the investment
firm has made a $22.5 million investment in E*Loan (EELN) to help the company
expand overseas.
News Corp.'s ePartners unit will also invest $100 million in another
Softbank-controlled Internet venture fund. The joint venture between both
companies should not have come as a surprise to investors. Softbank was one of
the original investors in JSkyB, the subscription-based satellite television
venture of News Corp. The tightening of relationships between the two should
give Fox's programming assets and Web investments an opportunity to work more
frequently with Softbank and its vast portfolio of Internet companies in the
future. In my opinion, the eVentures joint venture is the most aggressive and
crafty move that Murdoch has made on the Net to date.
Utilize TV Guide Interactive as "TV Portal": One possible explanation for News
Corp.'s decision to not build a general purpose Internet portal, is that it
already believes that in many respects it already has one. Here's what I mean.
Murdoch controls a 49% voting and 44% equity stake in TV Guide. No, it's
definitely not the well known weekly print magazine that has News Corp. excited.
TV Guide has also developed an on-screen programming guide called TV Guide
Interactive for digital television and interactive television viewers. Murdoch
is betting that as the Net and television continue to converge, viewers will
increasingly turn to interactive programming guides to navigate the Web and sort
through the hundreds of channels available. I'm sure News Corp. would then like
to plug in its Fox-branded Web sites and various Net investments into this
interactive programming guide, creating a broadband portal directory in effect.
We shall see. This is a nice thought, but TV Guide Interactive's success is far
from certain. They face heavy competition from GemStar International (GMST),
which has already struck licensing agreements with AOL, Microsoft (MSFT) and a
variety of television manufacturers.
Build on Malone and Liberty Media relationship: Future Internet-related deals
between cable cowboy John Malone and News Corp. would appear to be on the
horizon. Earlier this year, Fox purchased the 50% of Fox/Liberty Networks that
it didn't already own from Liberty Media (LMGA,LMGB), the programming arm and
investment vehicle of cable company TCI and John Malone. In exchange, Liberty
boosted its stake in News Corp. to 8%. This makes Liberty the largest
shareholder in News Corp. after the Murdoch family. This is also hardly the
first time that Murdoch and Malone have worked together. Liberty also holds a
44% stake in TV Guide.
Liberty Digital (TUNE), a newly formed Internet investment vehicle controlled by
Liberty Media, has the rights to develop 12 interactive television channels to
be carried over AT&T's (T) cable systems. James Murdoch, Rupert Murdoch's son
and president of News America Digital Publishing, recently stated that News
Corp. is working with its "programming partners" to create interactive
television services. News Corp. is cutting broadband content deals with
ExciteAtHome, RoadRunner and others because it desperately needs distribution.
Liberty can provide that. Not only does Liberty Media control valuable AT&T
cable system rights, but Liberty also has a minority stake in ACTV (IATV), a
developer of interactive and personalized television services. I find it more
than a coincidence that one of ACTV's first programming partners is
FoxSportsNet. Watch, Murdoch and Malone, as well a number of their various
Internet investments, will break bread together in the near future.
Forecasting Fox's Net future
After an incredibly late start, News Corp. seems to finally be picking up steam
on line and starting to make the right Net-related moves. Recent broadband
content deals, a joint venture with Softbank and the formation of a separate
Internet venture fund suggest that Murdoch has finally gotten the News Corp.
machine into gear on the Web. Of course, a quick check of Internet research
firm Media Metrix's Top 50 Digital Media/Web Properties for the month of May
reveals that News Corp. Online ranks a lowly No. 41. A very embarrassing reality
check for Murdoch & Co., I'm sure.
While these recent moves are progress, News Corp. still has a tall mountain to
climb on the Web. Could Murdoch's Fox end up looking like legendary mountain
climber George Mallory, whose body was found frozen halfway up Mount Everest
earlier this year? Perhaps, but I'm not counting out a cunning deal maker like
Murdoch yet. He has too many off-line media assets that fledgling Web start-ups
drool over to be called out of the game yet. Time and time again, Murdoch has
persevered and succeeded in the past. The question now is: Does News Corp.'s
team really have what it takes to succeed and thrive in this digital blizzard
called the Internet? Better put on a thick parka, Rupert. It's going to get
awfully windy half-way up this mountain. |
