Remember a year ago we were all talking about how TV networks were taking over the Internet? Do you wonder why you haven’t heard that talk lately?
It might be because there’s no money in it. While the big TV networks have been able to buy big Internet audiences, it’s been costing them millions of dollars each month. The committee style of management TV that networks are accustomed to hasn’t been a hit, either.
If the Net were like the TV show “Survivor,” for example, TV execs would get thrown off the island.
The biggest embarrassment may be at Disney, owner of ABC and the ill-fated Go.com. While the Go.com sites drew 21.907 million unique visitors in June, according to Media Metrix, it’s bleeding red ink like a horror movie. Last week it celebrated a loss of $52.6 million on sales of $86.3 million it has lost $272 million for the year. Things are so bad that the company is changing its name back to the Walt Disney Internet Group. Starting today, its ticker symbol is DIG (symbolic, don’t you think?).
It didn’t have to be this way. Under Harry Motro, Infoseek had solid leadership and leading-edge technology. All that was stripped away in a bureaucratic turf war. Even the name Go.com, brought forward with great fanfare in early 1999 was a bust. Its logo turned out to be a copy of that of rival GoTo.com. That dispute finally cost Disney $21.5 million, and Disney had to abandon the logo.
As the Disney Internet Group, the company is going to “reposition” itself “on recreation, entertainment, and leisure.” In other words, it’s just going to provide online support for Disney’s TV, film, and theme-park properties. Does anyone remember how much Infoseek cost? Try $770 million for a 43 percent stake and stock reportedly worth $1.62 billion for the rest.
Things didn’t work out much better for the peacock network. The company’s NBCi portal, announced with great fanfare by NBC President Robert Wright, now sports a stock chart that looks like a ski slope. It, too, went through a painful restructuring in June that made it a support group for the parent, doubling its quarterly loss to $30.5 million on revenues of $25.3 million.
Like Disney, NBC also made some expensive acquisitions. The company never said how much it paid CNet for 60 percent of Snap, but Xoom.com was reportedly worth $1.5 billion when NBC merged with it in mid-1999. Needless to say, both those expensive brand names are going bye-bye.
CBS has actually done a little better, mainly because it has left its Internet assets alone. MarketWatch.Com Inc. is worth 40 percent less than it was a year ago, CBS Sportsline is near its levels of a year ago, and all it cost CBS was some branding. The success might be due to the fact that CBS itself has been in the process of being acquired by Viacom for the last year.
CBS remains the smartest of the networks. While it formed an Internet division in January, it laid off a quarter of those people in June.
There’s a lesson here for any business entering an industry that it is unfamiliar with. Follow the Hippocratic oath: First do no harm.