Pumping Up a New Tube
NBCU, News Corp. Web Venture to Take on YouTube
By Todd Spangler -- Multichannel News, 3/25/2007 8:00:00 PM
Can’t bear to join them? Then try to beat the pants off ’em.
That philosophy was in rich display last week as News Corp. and NBC Universal unveiled a long-rumored online TV venture.
The not-yet-named joint venture will distribute video to its own site, as well as to Yahoo, MSN, AOL and MySpace. Even before it was announced, the partnership was tagged as a foil to Google’s YouTube, the Internet’s top video destination today and one that’s irked traditional media firms with heavy-handed negotiating over distribution rights.
| Snapshot: The NBC-News Tube |
|---|
| What NewCo has planned: |
| Source: Company reports |
| Scheduled to launch: Summer 2007 |
| Content distribution: Through the venture’s own unnamed site, plus Yahoo, MSN, AOL, MySpace |
| Based: N.Y. and L.A., headed on interim basis by NBCU chief digital officer George Kliavkoff |
| To include: “Thousands of hours” of ad-supported TV programs, initially from NBC Universal’s and Fox’s own cable and broadcast networks |
| Ad support: Dedicated sales team to sell ads; initial advertisers include Cadbury Schweppes, Cisco Systems, Esurance, Intel, General Motors and Royal Caribbean International |
| Feature films: Movies from Universal Pictures and 20th Century Fox to be sold on download-to-own basis |
| Also available: User-generated content features, such as mashups |
But NBCU and News Corp. execs said their NewTube will be bigger — and better — than YouTube. The venture represents “the largest Internet video-distribution network ever assembled,” the companies claimed, reaching 96% of monthly unique visitors to U.S. Web sites.
“We expect this site to be, or we hope it to be, the No. 1 video destination on the Internet,” News Corp. president and chief operating officer Peter Chernin said on a conference call.
But the unnamed venture, referred to by founders as NewCo, isn’t intended to be a “YouTube killer,” Chernin said. “If this was a 'YouTube killer,’ we wouldn’t have any distribution partners,” Chernin said.
He added that the companies are already in discussions with other content providers and distributors — including Google. “We had a conversation with [Google CEO] Eric Schmidt this morning, and they are considering this,” Chernin said.
Alan Gould, senior analyst at investment bank Natexis Bleichroeder, said this represented the best course of action for traditional media companies.
“The next distribution channel will be the Internet,” he said. “Why give it to Google or YouTube when you can own your own distribution network?”
But one unanswered question is how well the venture will be able to attract additional content partners, such as Time Warner or Viacom, which will be key to providing enough content to attract advertisers and online viewers on a large scale, Gould said.
While the venture will “clearly cannibalize the traditional cable and broadcast networks,” he said, “the reality is we’re moving from a linear to nonlinear world, and some portion of TV is going to be online. They can either fight it, or be part of the growth business.”
NBCU CEO Jeff Zucker insisted that the new venture would not steal away viewers or ad dollars. “I don’t think it’s at all cannibalistic. We’re determined to add to our revenues.”
The video site is scheduled to debut this summer with “thousands of hours of full-length programming, movies and clips” from NBCU’s and Fox’s cable channels, national broadcast channels and Universal Pictures and 20th Century Fox.
Shows to be available online through the NBCU-News Corp. venture will include NBC’s Heroes, My Name Is Earl, Saturday Night Live, Friday Night Lights and The Tonight Show With Jay Leno. Fox shows will include 24, House, The Simpsons and FX’s recently premiered The Riches.
Zucker said NewCo will have a dedicated ad-sales force, which will be put into place over the next few weeks. Revenue from ad sales will be shared among the partners, with “the bulk of it” going back to the copyright holders, he said.
The site will compete head-to-head with YouTube, which serves more than 100 million video streams daily. TV programmers have viewed YouTube as a double-edged sword: potentially valuable as a promotional outlet, but problematic in terms of the lack of control it affords over video posted to the site.
In fact, the NewCo announcement comes one week after Viacom filed a $1 billion copyright-infringement lawsuit against YouTube and Google.
Viacom, while not an ally in the NBCU-News Corp. announcement, did not rule out contributing content from its programming networks.
“We welcome any additional distribution” where intellectual property is protected from unauthorized use, said Mark Morril, Viacom’s deputy general counsel, who worked on the lawsuit filed this month against Google and YouTube. “Our understanding of that site is that it’s going to be a copyright-respecting site.”
