Hope this answers some of your questions.
JMR
February 8, 1999
TV Networks Look to Firms
With Names Ending in Dotcom
By KYLE POPE
Staff Reporter of THE WALL STREET JOURNAL
The big TV networks are becoming the hottest dance partners on the
Web.
In the last few months, Yahoo! Inc. teamed up with News Corp.'s Fox;
America Online Inc. struck a news alliance with CBS Corp.; General
Electric Co.'s NBC has gobbled up stakes in a slew of Internet players,
from the Snap portal service to iVillage, a specialized Web site for women;
and Walt Disney Co., parent of ABC, acquired a stake in Infoseek Corp.,
the search-engine company.
Both NBC and CBS are considering public offerings of their Web assets,
with an eye toward using the proceeds from those stock deals to buy
stakes in other Internet players. NBC, for instance, has been in talks with
several players, including Lycos Inc., although a deal isn't believed to be
imminent.
NBC and CBS in particular are regarded as ripe for deal making; CBS
remains the only independent TV network left, and GE has acknowledged
exploring an alliance or other deal to expand NBC's reach.
Though no one is ruling out the purchase of an Internet company by a
network -- or vice versa -- for now the focus is on alliances and equity
investments, network and Internet executives say. "There is a great interest
in us from all of the companies whose names end with dot com," says CBS
Chief Executive Officer Mel Karmazin. "If you want to survive as one of
these companies, you've got to have a media partner."
Gone are the days when Web companies dismissed the TV networks as
media dinosaurs, with their declining viewership and older audience. Now,
with the number of choices on the Internet exploding, Internet company
executives say establishing a recognizable brand name is more important
than ever.
And even the biggest Internet players are realizing that the big networks
are still the only way to reach huge numbers of people at once. "It's critical
on the Web to get exposure," says Mike Levy, chief executive of
SportsLine.com, a Fort Lauderdale, Fla., sports-news site that has struck
a promotional deal with CBS. "It's very difficult to get noticed otherwise,"
he says.
To the cash-strapped networks, the Internet interest also offers a financial
lifeline. Although their audience still exceeds that of the competition, all of
the broadcast networks have struggled in recent years against declining
profits and viewers, as cable and the Internet itself continue to lure viewers
away from free TV. Some analysts have even begun speculating that one
of the major networks could even go out of business, if current trends in
programming costs and lower viewership continue.
While Internet deals won't change the fact that people aren't watching as
much as they once were, they have reinvigorated the networks'
management teams. At NBC, for instance, executives now define the
network not so much as a programming service but as a powerful
promotional tool that could be used to get new businesses off the ground.
"There is going to be this burgeoning recognition that broadcast companies
are great ways to help create value," says Tom Rogers, president of NBC
cable and business development. "It's inevitable."
The Web ties also offer the networks a chance to expand their audience.
With younger, upscale viewers increasingly fleeing broadcast TV, the Web
represents to the networks one other possible way to hook them in. "They
view this as a key new alternative way of distributing their content," says
Nicholas Heymann, an analyst at Prudential Securities Inc. in New York.
Whether the marriages between the networks and Internet companies will
be enough to offset the economic woes of the networks remains to be
seen. The networks, after all, have been cautiously looking at Internet
companies for years. NBC teamed up with Microsoft Corp. three years
ago on MSNBC, a cable venture that was supposed to be aimed at the
"digirati." The focus of the effort was eventually revamped, though the
MSNBC Web site remains one of the most popular news destinations on
the Web. Disney, meantime, has made an aggressive push on the Web
with its new Go.com portal, though it so far hasn't made its ABC
broadcasting unit an integral part of the service.
For the networks, the Web until recently has been used primarily as a
promotional vehicle. All of the major networks have extensive sites that
they use to pitch their shows, with NBC even offering separate, online
storylines for its drama "Homicide." Those sites, though, haven't extended
much beyond in-house ads, and the audience for them has been tiny.
TV executives say the Internet deals that have worked so far-and the ones
that are likely to dominate the news in the next few months-simply swap
cash or equity in online sites for promotional time. Fox's deal with Yahoo,
for instance, calls for the Web company to spend $20 million in advertising
time on Fox, while the network has agreed to promote Yahoo on the air.
In an unusual twist, Fox even has agreed to insert Yahoo into storylines of
some of its shows, in hopes of creating added buzz for the Internet service.
Under CBS's deal with AOL, the network is paid for providing news to
the site, as well as including a plug at the end of every broadcast of the
"CBS Evening News."
But more ambitious links are in the works. NBC, for instance, is
revamping the Web site tied to its CNBC cable venture, and expects
eventually to offer everything from online stock purchasing to financial
advice online.
"NBC is not going to be a wallflower in this area," said Prudential's Mr.
Heymann. "They see an opportunity to be involved in consolidating an
industry."
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