Follow-up article on BW online:
What Yahoo! Sees in Broadcast.com:
Eyeballs
It's not profitable, but Broadcast.com has the attention of millions
of multimedia-loving Web surfers
If you're puzzled that anyone would want to strike a
deal with Broadcast.com, a money-losing streaming
media site run out of a converted warehouse in Dallas,
think underwear. Sure, video sent over the Internet
appears jerky and low-resolution compared with
broadcast TV. And the sound falls a bit short of
FM-stereo quality. But more than 2.0 million users
logged on to see the Broadcast.com Webcast of
Victoria's Secret fashion show on Feb. 3,
The event underscored the Web's evolution from a
text-based medium to one that offers live or archived
feeds of audio and visual content. And as major portals
compete for eyeballs, Broadcast.com offers the Web's
largest collection of multimedia. It Webcasts feeds from
more than 400 radio and TV stations, hours of CDs and
audio books, and reams of specialized content, from
press conferences to live air-traffic-control-tower
babble.
"Audio/visual has the potential of turning into a massive
consumer market on the Internet," says analyst Mark
Mooradian of Jupiter Communications. That could be
just the ticket to make Yahoo!, which is in talks with
Broadcast, the portal of choice for millions of Web
surfers (see BW Online Daily Briefing, 3/19/98, "Is
Yahoo! Ready to Rack Up Broadcast.com?").
The interest in Broadcast comes as Microsoft, Viacom,
and major media are muscling in. Viacom, which runs
the popular MTV Networks, has acquired Imagine
Radio, an online provider of customizable streaming
audio, and set up a new Internet division. Viacom has
also expressed interest in acquiring the Ultimate Band
List, a popular music site, sources say. As for Microsoft,
on Mar. 18, it launched Web Events 3.0, a major
upgrade to its streaming media site.
WHERE THE MONEY IS. Although Broadcast.com is known
for its extensive hookups with radio and TV stations, the
bulk of its revenues are derived from broadcasting
business events, such as earnings announcements or
analysts conferences. More than 1,100 companies,
including Intel and Texaco, pay up to $350,000 for
broadcast services. Revenue from this business jumped
183% during the quarter ending Dec. 31, to $7.6
million, or 63% of the company's total. For the period,
Broadcast.com had a net loss of $3.7 million. "These
business-to-business services deliver cash flow that
will really allow them to be a leader in the enterprise
space," says Mooradian.
More important, though, is the promise of streaming
video, highlighted recently not only by the turnout for
Victoria's Secret fashion show but President Clinton's
videotaped deposition during the impeachment hearings.
Although these events are difficult to earn money from,
they have tremendous potential in luring in new users
and registering them. "And in the online media
business," says Mooradian, "knowing who your users
are is what it's all about."
Speculation that streaming sites could be the focus of
another frenzy of Net-related mergers has supported
stocks in that sector. Shares of Broadcast.com (BCST)
fell $2, to $85, on Mar. 19. But they've soared in the last
four months, giving the three-year-old company a
current market valuation of nearly $3 billion.
Among other Web multimedia companies, the share
price of San Diego-based InterVU Inc., which provides
Internet distribution services for streaming content, rose
1 5/8 on Mar. 19, closing at 33 3/8. That's up from it's
52-week low of 5 1/8. Shares in RealNetworks, which
sells the most popular software for streaming content on
the Internet and runs its own directory of online
multimedia content, jumped 14 3/4, to 141 3/4, on Mar.
19. All of that stock action was before the news on
Yahoo! and Broadcast.com broke. Monday should be
interesting.
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