We Called It…

On Christmas day we had a crystal ball…
In our post on Dec 25th one of our preditictions was News Corp. buying Dow Jones…
While not complete, at least we get credit for something.

Exclusives: Calcanis investors; News Corp. Play; Yahoo Failures

HOT EXCLUSIVE: The Insider has learned that Jason Calcanis‘ stealth start-up backed by Sequoia Capital has closed on a round of funding from Sequoia, News Corporation and CBS. The undisclosed funding is interesting. Two strategic investors and the hottest Silly-con valley VC.

We hear that the News Corp. investment is not from Fox Interactive Media, but from Jeremy Philips who acts as Rupert’s eyes and ears on the internet. This venture play seems a bit at odds with the News Corp. strategic joint venture with Google. Philips has begun to make his mark as a force at News Corps., recently cutting a deal with ROO Networks. The CBS investment was led by Quincy Smith. Another oddity here — CBS has now made a few venture bets and one acquisition — Max Preps. It would make more sense to be building their base then making venture investments.

News Corp’s massive bid for the WSJ will be played out for the next few weeks with massive speculation. The Media Insider thinks the real drama will be in the corporate suite of News Corp where should this deal happen, it may pave the way for scion James Murdoch to return to the mothership. Murdoch Senior is anxious to bring young James back after his stellar job with BSKYB and Star. This could be the impetus. It could also prove troublesome for COO Peter Chernin.

Lastly, Yahoo’s desperation play for Right Media is the move of a flailing company. Two days after CEO Terry Semel’s $40m payday was announced, the company paid 700 million times 06 earnings…which were ZERO. For a company with $70m in topline revenue to garner $680m for 80%, it was a bubble trade. Different from Googles buy of Doubleclick, which was profitable, did more than $300m in revenue and was a market leader. Someone put a bullet in this companies head. Can you say — Microsoft take us away?

Buyouts Heats Up

Today, IAC announced that it was launching it’s own Virtual World called Zwinktopia. This space seems to be the next craze following the last two years of Social Networks and Video. Second Life has generated the most hype/buzz in, with others including Gaia and Habbo Hotel joining the fray. With IAC’s announcement, this is clearly going to get overheated. Now the Insider has learned that Club Penquin, one of the most profitable startups in memory has hired Montgomery Bank to sell it. Word is that News Corp., Viacom and Disney are all in hot pursuit and the price tag will be north of $250 million. Executives from all three companies have visited the Vancouver-based company and a deal is imminent (within the month). Word is that Club Penquin is doing north of $10 m in profits this year.

In other buyout news, final bidders on the Maxim Magazine (dennis publishing) business are in. Word is that Elevation Partners and Quadrangle are the finalists. Kurt Brownridge, the former Rolling Stone exec, is heading the charge for Quadrangle.

Lastly, Carlyle Group has hired Norman Perlstein to help it in its evaluation of buying the Time Magazine properties. Perlstein, the former Czar of Time Inc Publishing is eyeing the big payday.

Media Politics

CBS seems to be doing all the right things online. New Internet Czar Quincy Smith is creating a distributed strategy that seems to have press and wall street abuzz. If it works, his star will continue to rise at the aging broadcaster. With trouble throughout — Network is off, Radio is a disaster (see Don Imus) and Showtime has struggled, Internet may well be the saving grace for the Tiffany Network.

NBC on the other hand is having it’s share of issues. The Network is in the dumps for the third consecutive year. Movies and Theme Parks are struggling and their internet doesn’t seem to be going anywhere. Yet GE honcho Jeff Immelt has given former Wonder-boy Jeff Zucker yet another vote of confidence. But has he? GE stalwarts are now in place in key slots at NBC, including Beth Comstock. While no one outside the GE bubble can understand how this one time pr gal keeps ascending, it’s clear to the Media Insider — her loyalty to Immelt, quiet confidence and good looks have helped her star rise. She has managed to become such a threat to Zucker that he has his pr stormtroopers planting negative stories about her in such trashy tabloids as the NY Post. Clearly the work of an “insider”, Zucker continues to be a master politician creating intrigue and doubt throughout.

Over at FOX, word is that a major shakeup may be afoot. Perhaps “politics” is the key at this intensely competitive media death-star. Know for his overwrought politics, Rupert Murdoch’s media empire has never been a safe place for anyone. Longtime aid and insider Chase Carey was cast aside (some say thrown) by Murdoch with the sale of Directv to John Malone. Now insiders are telling me that long-time publishing queen Jane Freidman barely escaped with her life last fall, only to be saved by COO Peter Chernin after a Murdoch tirade. Heir James Murdoch is said to be headed stateside to continue his ascendency to the top of the charts. Unlike his brother Lachlan, who was masterfully cast aside by Chernin and politico Roger Ailes, James will not be a pushover, and insiders say he is already making his plans to dispatch long-time ruler Chernin, whose golden touch has ruled for nearly 2 decades. The biggest threat to Chernin may be the combo of James and Myspace CEO Chris DeWolfe whose star has risen considerably and is said to be on the verge of signing a 5 year, $50million dollar contract and reporting directly to Rupert himself, eclipsing Chernin. Dewolfe has recently done deals bypassing tv executives with his deal with Mark Burnett; movie execs and created a music label. Now clearly in control on the internet (since the departure of internet exec Ross Levinson last winter), Dewolfe is said to have his eyes on an even bigger prize. Word is he is spending considerable time with Rupert and his wife Wendi, who apparently has taken an office directly next to DeWolfe.

Finally, at ABC the rise and now fall of Andrea Wong is the behind the scenes story for many. While on the surface, Wong’s appointment as CEO of Lifetime seems to be a success story. Behind the Scenes, the Media Insider says this is the dirty work of none other than masterfully politician Anne Sweeney. Rising star Wong was widely credited with such hits as Dancing with the Stars, and Sweeney, long the favorited fair haired gal of Bob Iger was threatened. She has done a fantastic job of eliminating all threats (much like Chernin over the past 20 years — oddly, she used to work for him) including Steve Bornstein, Alex Wallau and Lloyd Braun, and now Wong, the latest threat was “promoted” to Lifetime, eliminating another threat to the empire.

And you though Washington had politics and dirt.

Me-Tube Disaster Coming

Can Big Media Challenge You Tube

Could be media be so arrogant as to simply not understand why You Tube worked and think that by lumbering to the party they can create a competitor? First we need to understand the ego involved. Fox, NBC and others believe its all about “them”, and what the internet is teaching us each day is that it is about you.

Sure, content like The Simpsons, The Office, David Letterman and TRL matter — but they don’t matter in a user generated, user controlled world. Big Media still thinks the world revolves around them. What the consumer is telling them each day is that it belongs to them.

10 years ago, audiences flocked to television, to big newspapers like the NY Times, Philadelphia Enquirer, magazines like Time and Newsweek. Today, Fox News may dominate cable news, but barely registers on Nielsen’s online numbers. Why? Arrogance, control, ego. Today, the user decides, not some octagarian sitting in a New York office the size of a football field.

So to think that by creating a Kabal and combining assets on a You Tube clone, audiences will flock. They may in fact rebel. Not to mention that the second the ink dries on a contract, these fifedoms won’t start bickering about whose content matters most is illogical and easily insane.

Watch. It’s been months since we’ve first “heard” about this idea and still there is no deal. What does this tell you? They can’t even agree on the who’s, how’s and where’s. Ego. In the meantime, in six months, You Tube has more than 80 million worldwide users and others are exploding. Today, Fox.com, CBS.com, NBC.com and ABC.com combined don’t equal 1/5th the users YouTube has.

Then there is the talent. The guilds are starting to wake up and realize that these media conglomerates are prostituting their creative work, and not cutting them in. Strike overtures are floating from SAG and Aftra unions which will certainly create strife for any merged asset. Strike three.

From news reports, this idea is being driven by Peter Chernin and Jeff Zucker. One has to wonder how these two plan on policing YouTube, Revver, Yahoo, MSN and three dozen other of sites who today carry their content — legally and illegally. Will they sue and further alienate their users? Will they stop Apple? What will Walmart, Blockbuster, Target and Best Buy say when all those tv dvd’s they sell are marginalized online. Those are big, real revenue streams that will dry up if these two media titans aren’t careful.

Media Predictions for 2007

Certainties For 2007

2007 is poised to be a super transformative year in media. Here are my first predictions for 2007

1) Yahoo CEO Semel retires after a merger with Ebay
2) AOL gets bought by MSN
3) Comcast buys IAC
4) News Corp buys Dow Jones/WSJ
5) Google buys the New York Times
6) Time Warner sells off magazine group to Private Equity
7) GE keeps NBC, replaces Zucker with GE manager
CBS goes private
9) Massive shift in digital distribution as content holders create mulitple distribution points for library and current product — guilds revolt and strike.
10) Bloggers continue ascendance

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