Does a $100 Million Investment Mean a Site Launch is Imminent?
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Written By Drupad Sil | August 9, 2007 | Share This
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The New York Times carried a story today reporting that NBC and News Corporation’s joint venture to bring their shows and movies online has received a $100 million investment. The funding, from Rhode Island-based media investment firm Providence Media Partners, will go towards securing a 10% share of the venture, effectively pegging the total valuation of the project at $1 billion.
Here’s what the New York Times has to say on how the capital will be used:
“The investment will allow the companies to accelerate the introduction of their service and the transfer of NBC and Fox films and television shows into Internet-friendly video formats. Adding Providence as a partner also spreads the financial risk of the networks and will no doubt make the venture more palatable to the boards at General Electric and the News Corporation, which, respectively, own NBC and Fox.”
There has been a lot of discussion on this joint venture since its announcement back in March. The idea behind this massive offering is to counter the perceived Google-YouTube threat, especially since YouTube recently announced its intention to move into the realm of carrying licensed content, as opposed to user-generated content. To beat YouTube to the punch, NBC and News Corp. have teamed up with Yahoo!, MSN, and AOL. Of course, News Corp.-owned MySpace will also get in on the distribution act, making this team of archived television and movie content and distribution hubs tough to beat, even for the Google-YouTube alliance.
However, as noted in an article by Michael Arrington over at TechCrunch, it’s hard to take a YouTube challenger seriously when it doesn’t even have a name yet:
“It was announced in March to fanfare, and a steady stream of news has been written about it ever since. But no one has a name for it, not even the New York Times which reported today that the joint venture managed to find someone willing to throw $100 million at it for 10% (reports that they were pitching this came out in June). And so we keep referring to it as Clown Co., which is the name Google execs reportedly refer to it as behind closed doors.”
Clown Co. is almost certainly not what the executives at News Corp. and NBC had in mind for their venture, but it seems the name will stick until the official site name is released. So, as end-users, the question for us is what happens if this conglomerate shuts YouTube out of the licensed content market? Is it really such a bad thing after all? Adario Strange at Epicenter has some thoughts:
“In my view this is a welcome development. I’d prefer that YouTube remain focused on user-generated content and foster indie-productions, rather than using that Web 2.0 user-generated hype to simply turn itself into another channel of commercial content. On the other hand, I suspect the only thing compelling NBC/News Corp. to offer most of its content for free initially is the threat of YouTube offering licensed content for free on its site. If that threat ever fades for good, it seems like a sure bet that sites like this, run by major studios, will probably switch to a paid content model overnight.”
Before any of that can happen, the site has to actually get a name and launch. Amid reports of bickering between NBC and News Corp. over the direction of the “New Site”, both companies announced their intention to take the site live in Autumn. Assuming the coalition holds together, a lineup featuring content from Heroes, 24, Saturday Night Live, and the Simpsons may well be too good to pass up, even for hardcore YouTube viewers.
Topics: Investment, M&A, Media Convergence |