In “How High the Sky,” I noted that Yahoo is now worth more than any big media company. It’s worth more than ABC, more than CBS, more than Time Warner, and much, much more than Fox. If you spun NBC out of GE, I suspect it’s worth more than that, too.
This has happened at a time when the big media tycoons have been merging and dealing like mad to guarantee themselves control of the future. ABC, for instance, is now a unit of The Walt Disney Co. (Yahoo’s worth more than that), and CBS has announced it’s merging with Viacom. (Yahoo’s worth more than both of ’em put together.)
Heck, until it pulled back the other day following its entrance into the Standard & Poor’s 500, Yahoo was even worth more than Bill Gates. (Not Microsoft, mind you. Just Bill.)
The result of all this, I’ve found, is that Big Media is going through a bad case of Yahoo Envy. It’s being manifested in two ways. First, the networks are anxious to do their own Internet deals. Second (and perhaps most important), the networks are looking at their Internet “rights” as something that must be kept (somehow) from Yahoo’s clutches.
We’ll take them one at a time.
Over the last year, the networks have learned that their airtime can be used to buy Internet equity, so they’re trading promotion for stock, then spinning out the stock. That’s how CBS got its hooks into Marketwatch and Sportsline. That’s what NBC did in creating its NBCi unit. That’s what the Go Network is all about.
Even Fox has joined in. If you look carefully at its agreement with Healtheon–WebMD you’ll notice that 70 percent of its $1 billion partnership (for which it gets a 10.8 percent stake) comes in the form of “branding services.” That’s a fancy word for house ads.
Beyond getting something for nothing, the networks are trying to do their own e-commerce, based on their shows. NBCi is selling jewelry based on its daytime programs, and ABC’s “Enhanced TV” stuff which runs alongside Monday Night Football is filled with opportunities to buy from ESPN.
You’ll see the second trend on exhibit next month at the NATPE show in New Orleans, where program producers sell their wares to stations and cable nets. The success of the “Drew Carey Show” Web site (about 1.9 million people signed up for its contest in 24 hours) has been a wake-up call.
When CBS tied-up the NCAA tournament for 10 years at $500 million/year, it also tied up the Internet rights. Network executives are telling producers they’d better not even think of offering their wares to “the competition,” as they refer to Yahoo and Real Networks. When they pitch ideas, they’d also better bring the Internet commerce sidelines to the table – they can make or break deals.
Now there is one counterweight to all this. Creative people love the idea of using Yahoo, Real Networks, and even Macromedia to sell their wares online. For creative control (and some of that Internet equity), even the makers of the hot TV cartoon “South Park” can be had.
What this means for Yahoo is that an idea I mentioned almost as a joke a few months ago has to be taken seriously. Tim Koogle has described Yahoo as a media company, and it needs to buy media to stay competitive. Timmy’s going to Hollywood.