News Corp and NBC Align for Multi-Partner Video Venture

News Corporation and NBC Universal have joined forces in a bet that premium Web video content and broad scale online distribution will drive ad dollars to a new multi-partner media venture. Thus far, AOL, MSN, MySpace and Yahoo have signed on to distribute TV and film content from News Corp., NBC TV, and other unnamed networks and film studios. The new partners have even spoken with Google regarding the possibility of joining the network. Advertisers planning to buy on the unnamed network include Cadbury Schweppes, Cisco, Esurance, Intel Corporation, General Motors and Royal Caribbean.

“The [advertiser] demand for this kind of video online gives tremendous credibility already” to the offering, said Peter Chernin, president and COO, News Corp., owner of properties such as Fox and MySpace. The partners are in discussion with other advertisers since announcing the deal yesterday, he added.

Network content will include full episodes and clips from current shows like NBC’s “30 Rock,” and Fox’s “The Simpsons,” and films such as Twentieth Century Fox’s “Borat.” Content will reside on a to-be-created site, and on customized players embedded on distribution partner sites. Most content will be available free, though some will be paid. Following launch this summer, additional content may be obtained from other providers, and possibly developed specifically for the new site. Users will be able to grab videos and create mash-ups to share and place on their own sites.

The companies would not go into detail regarding the types of advertising that will be offered on the video network; however, one can assume some form of in-stream video advertising will be available. “The show comes with the player and the player has our ads in it,” said Chernin, noting ads will be served within videos and mash-ups wherever they appear, including user sites and blogs.

The two content providers plan to share ad revenue with copyright holders and distribution partners, though the companies did not mention whether users placing video on their own sites will also be offered a cut. A new sales force is being formed to sell ads in the new network. Still, it is unclear whether the new centralized sales team would be able to sell individual shows across TV and Web platforms.

NBC Universal President and CEO Jeff Zucker said Web video advertising experience gleaned through NBC’s own efforts will inform ad format decisions for the new operation. “We’ve actually been shocked at the willingness of the consumer to sit through the whole show with ads on,” he said. NBC yesterday announced the addition of social media features to its site, including user profiles and video and photo sharing.

The media was aflutter following the news, which made a long-rumored deal official. Most industry watchers immediately drew a comparison to Google’s YouTube, wondering if the new partners aim to conquer the top consumer-generated video-sharing site. Zucker and Chernin dismissed the notion, first stressing their focus on professionally-produced content.

Both also insisted they are willing to open the network to any interested distribution partners, including Google. “We had a conversation with [Google CEO] Eric Schmidt this morning and they are considering this.”

The announcement shifts the focus back to media companies at a time when “almost anybody that cares about video online looks almost exclusively to [YouTube and Google],” said JupiterResearch Analyst Emily Riley. “I think that it’s a fantastic PR stunt,” she continued. “It creates a sense in the marketplace that these big media companies are taking video online seriously.”

Despite YouTube’s dominance in the Web video space, presence of the new network on MySpace, Yahoo, AOL and MSN promises to give the new venture exposure to the bulk of online users. According to Nielsen//NetRatings, the top five Web brands with the highest number of unique visits and time spent on their sites in order were Microsoft, Google, Yahoo, [AOL] Time Warner and MySpace-owner News Corp. Online.

The ability to reach a broad audience through premium content, as opposed to uncontrollable user-generated content is key, said Riley. “The advertisers have been begging for more video inventory online,” she said, adding, “Consumer-generated content isn’t very interesting yet to video advertisers.”

The new company will be located in New York and Los Angeles, and a transitional management group will be headed by NBC Universal’s Chief Digital Officer George Kliavkoff and other NBC and News Corp execs.

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