To Group: Advisory on BCST Takeover Rumors:
(In response to an inquiry on SI's BCST board.)
Thanks for posting the report, Keith:
Let's separate the signals from the noise. It's no revelation that people suspect BCST is an acquisition target. If you think about it, shouldn't BCST appear on the radar screens of companies like AOL, BEL, CBS, CPQ, DIS, GE, IBM, MOT, MSFT, TWX, T (ATHM), WCOM, YHOO, and others? And in a radical departure (very much out of character), shouldn't BCST even tempt the Internet Maestro, Michael "Direct" Dell?
Cuban and Wagner are 'way cool' and very, very smart. With apologies to the late Rod Serling, "they live in a Third Dimension, beyond that which is known to man..." Cuban and Wagner have put something together that may be unprecedented in the history of broadcasting, let alone the Net. In fact, I can't think of anyone who has done anything more strategic, preemptive or fascinating since William S. Paley created CBS more than half a century ago. Can you?
Don't have a clue where your friends get their "intelligence," but what seems most off-track is the price. It is inconceivable that Cuban and Wagner (who control the board) would agree to anything close to $190 per share. If I were advising them, I'd start the "bidding" at $500 a share (pre-split). Let's just say, North of $10 billion for the BCST franchise, and that's for "today only!" Keep in mind, BCST has plenty of cash, essentially no competition, more than 800,000 unique daily visitors, awesome initiatives, manifest "buzz," and what one Wall Street analyst rather meekly characterized last week as "hockey stick" growth. Why sell?
Consider a frame of reference. Last August, T tried to buy AOL for the "outrageous" price of $19B. Shrewdly, AOL demurred. It's more than tripled in value since then, and will shortly be worth $100B.
Here's something you should know. MOT and YHOO, along with INTC (who, predictably, has gotten what it came for--"processor cycles"-- and is phasing out its investment), are the most important continuing shareholders of BCST. It is quite possible that YHOO (think Softbank, CMGI), who made a small investment in BCST (then, AudioNet) a year ago, has a right of first refusal. Note, that's how YHOO "secured" GCTY.
In summary, there are certain key developments that would account for a rising chorus of speculation regarding BCST:
The first is the sudden and rapid ascendancy of broadband, perhaps best signaled by the emergence of AT&T/TCI/@Home/Excite. In any director's cut of the broadband movie ("coming soon to a PC near you!"), BCST is, well, leading man.
The second is last night's "sneak prevue" of Internet broadcasting's commercial potential, thanks to our drop-dead gorgeous and dear friend, "Victoria." While reports suggest 1.5-2 million viewers, who knows how many tried and failed?
(BCST *added* 150 servers just for this event, bringing its total to over 1,000. Not nearly enough. In fact, not even close. Couldn't get a stream. By contrast, when MSFT launched Windows 95 in August, 1995, it created a "server farm" of somewhere between 150 and 200 servers to support the *entire* Microsoft Network. So, let's ask a timely question: How many servers will it take to 'service' "Monica"?)
And third, as befits the new millennium, we are entering a year of massive consolidation of Internet players in 1999. The recent deals are large: NSCP, $4.2B; XCIT, $6.7B, GCTY, $3.9B. As we speak, the $10B+ deal threshold is lurking at this very thread...
When you called BCST to ask about rumors, whom did you talk to? I wouldn't attach any significance to someone's lack of a prepared response. Probably hired this morning. BCST is growing so fast it has set up three full-time recruiters on its campus just to interview sales people. It has to. After all, it's building a "sales farm" of 1,000 servers, too. No matter what, the answer should have been, "We can't comment on speculation."
Glad you gave me a chance to supply this briefing to the Group. Looking forward to comments.
I'll sign off with a familiar song:
'Some day, we'll all BCST this way.'
BAM
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