Time Warner and Comcast come together – merger of dinosaurs

Comcast will drop $45.2 billion for Time Warner. Wow. That is a lot of cake. It is expected that that the deal will be approved. Although it might not have been a decade ago. But how things have changed when it comes to this industry.

It is coincidental that the other day I was watching an early Seinfeld episode where Kramer convinced Jerry to get illegal cable – since the Mets would be on cable 70 times that season. But would Jerry need cable today? He could stream the audio through Sirius or get the television broadcast through MLB.com. If Jerry wanted to watch HBO or Cinemax he could sign up online, get the app and then stream it directly to his tablet, smart phone or laptop. Oh and if he went out and got a Chromecast or Apple TV device, he can just send the signal directly to his 60 inch LCD television and watch on the big screen. Need to watch some Winter Olympics from Sochi? Stream that heated Russia vs China curling match directly through the NBC sports app. Need a recap of the day in sports? Flip over to your ESPN app and watch Sportscenter. If Jerry wanted to watch “Rochelle Rochelle” he can probably find it either on Netflix or on Amazon direct. All this…without having to go through the cable companies.

Cable companies still have the advantage of being in many of our homes, right there next to the TV. Most consumers are very familiar and comfortable with the set top box – DVR function, pay per view and content. But the are fighting a defensive battle, trying to protect what they have as they are being assaulted from multiple angles. The ability to cut the cable and still get your fix is easier and easier – click here for such a plan.

Good luck to Comcast and Time Warner. That is a lot of capital to grow your empire. But could this be similar to the expansion of the Ottoman empire in the 1900s, looks impressive on paper, but fundamentally flawed.

Ouch – News Corp sells MySpace at a $545m loss…not a good ROI

Yesterday, News Corp announced it had finally unloaded the asset, MySpace to Specific Media for a whopping $35m! I think the equity valuation for the interns at Facebook might be worth more than that. That represents a $545m loss on the amount News Corp doled out in 2005 for, at the time, #1 social media site. Rupert Murdoch certainly did not bargain for this in 2005 when he thought he was filling out his media giant with the missing piece – social, which at the time was loosely defined as online communities. I am sure the father of Fox News is not smirking today as he absorbs a lovely 93% loss on his original investment and he really is no further ahead in the game when it comes to tying social channels into his portfolio, than he was in 2005.

So what happened? To me this feels very similar to when Time Warner and AOL decided to tie the knot. At the time you had an “old school” media company, Time Warner, associating its vast empire of assets with the new media kid on the block – AOL. What it represented was a company trying to latch on to the dot com craze of the time. Much like the News Corp – MySpace move, it also ended bitterly and not how any of the parties envisioned it ending. What lessons can we take from these?

• Acquisition is not always the answer for entering new markets. Time Warner and News Corp both might have been better served in growing online and social assets organically. Rather than acquiring a new technology company look to poach some of their personnel and give them the tools to develop organically. I cannot see companies such as News Corp and Time Warner having the appropriate cultures to allow the new kids on the block to continue to flourish.
• The deal you walk away from is just as important as the one you embrace. Groupon pointed to this as to why they turned down the whopping offer from Google. Funny how Google is viewed as potentially stifling environment! While the half billion in cash looked good to the MySpace team, it is peanuts compared to what Linkedin hit in valuations after IPO and what is predicted for Facebook’s IPO. Granted no one could predict what would have happened with MySpace had they stayed independent, hindsight is 20/20.
• Timing or luck or something else? “Luck is where preparation meets opportunity.” MySpace used to be the #1 social site. What happened? Luck? Opportunity? Or combination of all of the above. Interesting how the explosion of sites like Facebook coincide with the rise of the iPhone and better smart phones. In 2005, our social experience remained tethered to our computers. Yes blackberry was around and some of us had Treos or other version of a smart phone, but where were the apps? And no wide spread Wifi…Maybe it was bad timing for the likes of MySpace, but that is the Darwinian reality of business and high tech.

So the page turns for MySpace, not sure what the future holds for the one time front runner. Could they follow AOL and redefine themselves? Or will the go the way of Friendster and fade away to background of social media?

AOL – quietly reinventing itself – will it work?

With all the hoopla about the Super Bowl, car companies splashing advertising money, snow storms in Dallas and internet companies making light of political hardship an old dot com keeps plugging away in its quest to redefine itself and look to regain a sliver of its former glory – AOL. For many of us that remember the days of dial up we also remember the constant barrage in our mailboxes (the snail mail ones) of those AOL CDs, the ones that would grant us access, via the AOL portal, to the wonderful world of the internet, via the chirp of dial up. I recall for a while that my coffee table had a number of AOL CDs strewn across its table top acting as coasters. Ah the good old days of irrational exuberance.

AOL, the once might dot com company was overwhelmed by the likes of Google who realized that users did not need to access the web via a portal…especially when search engines made the entire web navigable and accessible. After a failed business venture with Time Warner, AOL has slowly started to redefine itself. Unlike Yahoo! who seems to be wanting to kick out social media from its portfolio, AOL has embraced social media and content and is instead looking to quietly aggregate many of the assets that have ridden the Web 2.0 to success.

The latest acquisition of the Huffington Post for $315m is another piece of the growing AOL content portfolio. The Huffington Post tops the Technorati list of top 100 blogs on a consistent basis, this blog is striving to break into this list…but still have a lot of work to do! the Huffington Post also has a healthy Twitter following – over 800,000 followers as of this writing.  Couple this with AOL’s early purchase of TechCrunch, another blog and the #2 blog on the same list, and clearly AOL is looking to bolster its reach in the cyber world of content. They have also acquired more niche blogging firms such as MMAfighting.com – a blog dedicated to fans of the MMA.  For a list of the companies AOL has been purchasing click here.

So what does this mean for AOL? For the amount of cash they are paying out for these assets I think they are getting some good deals. They realize that the search market is dominated by Google, with Bing and to some degree Yahoo! still commanding a large chunk of that market, so not worth getting into that. The portal strategy has sailed a decade ago. Free email is table stakes – with the likes of Facebook getting into the space shortly as well. Social is hot, but I am sure that AOL realizes with their brand name would make a pure social media strategy a difficult path to take. So instead they are moving into the social arena by seeking to control many of the destinations people are heading to for their content. With an increased amount of viewers seeking out blogs for their news and content rather than traditional sources like CNN.com or NYTimes.com, AOL has an opportunity to capture an audience that any advertiser and marketer would pay good money to reach. AOL is banking on the trend that blogging and other social media outlets will become the de facto outlet for content – and by owning a number of these assets they will also “own” access to their audience.

Just as Time Warner did when they merged with AOL, AOL is looking to get where the eyeballs are going and ensuring they can monetize that relationship. For AOL’s sake I hope they do a better job developing and nurturing those eyeballs and actually doing something with them, than did Time Warner with AOL. Otherwise the company synonymous with having mail, might continue to have relevance problems.