US Television Networks Launch Pre-emptive Strike on Internet Space

As the television landscape continues to evolve, US television networks have taken drastic measures to counter the threat of audience erosion to the internet. By acquiring a cluster of internet assets, these networks aim to establish a beachhead in cyberspace and recapture the attention of viewers drifting away to the web. With tactics mirroring each other, TV and internet services are being aligned to create a seamless interface between old and new media, blurring the lines between the two. The goal is to transform today's links into a unified experience, where audiences can effortlessly switch between the web and the television screen, engaging in interactive experiences such as game shows and chatting over soaps.

Key Takeaways:

• US television networks have acquired a cluster of internet assets to establish a presence in cyberspace and counter the threat of audience erosion.
• TV and internet services are being aligned to create a seamless interface between old and new media, with the goal of transforming today's links into a unified experience.
• The networks are counting on new revenue streams from retailing web sites to complement conventional TV advertising.
• NBCi, a new company resulting from the merger of existing web businesses and Xoom.com, will include Snap.com, a popular search engine, the network's own TV site, and video clip services.
• Disney's Go! network, built around its link with the Infoseek portal operator, has relentlessly promoted it on ABC and the Disney group cable channels.
• CBS has acquired 35% of Hollywood.com in return for $100m-worth of commercial time to promote the film-based site.
• The TV networks have yet to prove they can turn their internet ventures into commercial successes, with concerns about the reluctance of net surfers to pay for content and the cost of achieving synergies between old and new media.
• Internet stock prices have increased at more than double the rate of conventional media businesses since last summer, making acquisitions prohibitively expensive.
• CBS has suggested that the networks may need to round up their web assets into discrete businesses, go to market with public offerings, and equip themselves with high-price pure-play internet shares for future new media purchases.

Statistics:

• The average nightly audience of the CBS network is 13m.
• NBCi will be promoted over the next 10 years with $880m in airtime on the country's most popular TV service.
• The value of internet stocks has increased at more than double the rate of conventional media businesses since last summer.
• The stake acquired by CBS in Marketwatch.com is worth about $300m after the web service's initial public offering in January.

Sources:

• Financial Times Limited, 1999.
• General Electric's cable and internet operations, headed by Tom Rogers.
• Walt Disney, owner of the ABC network.
• CBS, with its acquisition of 35% of Hollywood.com.
• USA Networks and Lycos, with their failed agreement to merge.
• Viacom, which is funnelling its internet investments into sites based on its established MTV music and Nickelodeon cable television networks.