Fox, NBC to Launch YouTube Rival
By Todd Spangler & Tom Steinert-Threlkeld -- Multichannel News, 3/22/2007 7:53:00 PM
News Corp. and NBC Universal will team up in an online venture to distribute their TV programming an as-yet-unnamed jointly produced site, as well as to Yahoo, MSN, AOL and MySpace -- a partnership to counter Google’s YouTube, which has irked traditional media firms with heavy-handed negotiating tactics over distribution rights.
The media companies claimed that the partnership represents “the largest Internet-video-distribution network ever assembled” in a press release issued Thursday.
The joint venture will be located in New York and Los Angeles and will initially be led by NBC U chief digital officer George Kliavkoff. The companies said they will invest “a significant marketing and promotional budget” for the site’s launch.
"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 Thursday.
Chernin 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. Google representatives did not respond to a request for comment.
The site doesn’t have a name yet, but the founders referred to it as NewCo. The video site is scheduled to debut this summer with “thousands of hours of full-length programming, movies and clips” from NBC U’s and Fox’s cable channels, national broadcast channels and Universal Pictures and 20th Century Fox.
Shows to be available online through the NBC U-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 Riches and The Simpsons.
The initial distribution partners -- AOL, MSN, MySpace and Yahoo -- represent 96% of all U.S. monthly unique Internet users, according to NBC U and News Corp.
Charter advertisers for the unnamed joint venture include Cadbury Schweppes, Cisco Systems, Esurance, Intel and General Motors. NBC U CEO Jeff Zucker said the venture had already landed two additional advertisers Thursday morning, which he didn’t name.
Zucker added that there will a dedicated ad-sales force for NewCo, which will be put into place over the next few weeks. Revenue from ad sales will be shared among the venture, with “the bulk of it” going back to the copyright holders, he said.
The site will compete head-to-head with YouTube, currently the No. 1 video destination online, serving 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 control YouTube affords over video that’s posted to the site.
The NewCo announcement comes one week after Viacom filed a copyright-infringement lawsuit against YouTube and Google, demanding at least $1 billion in damages.
Viacom, while not a participant in the NBC U-News Corp. announcement, did not rule out contributing content from its programming networks to NewCo.
“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.”
Viacom has so far avoided creating its own YouTube-like portal to distribute programming from its MTV Networks, which include Comedy Central, Nickelodeon, VH1 and MTV.
Instead, it has distributed the content widely, through such sites as Apple’s iTunes, mobile-telephone services and Google’s own video store, where it gets compensated with clear commercial arrangements.
Viacom also signed a deal to provide content to a start-up YouTube competitor called Joost, founded by entrepreneurs who previously created Internet-based music and telephone services known as Kazaa and Skype, respectively.
And MTV created two “immersive” online worlds, Virtual Hills and Virtual Laguna Beach.
“The core of Viacom’s strategy is to go wherever consumers are going to get video online,” under lawful licensing arrangements, Morril said.
