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Summary:

Mark May is a principal and senior internet and digital media research analyst at Needham & Company, LLC, a full-service growth-company inve…

Mark May

Mark May is a principal and senior internet and digital media research analyst at Needham & Company, LLC, a full-service growth-company investment bank.

Ken Sonenclar

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  1. I think Ken's post was a little better, but some interesting ideas. The one I complete disagree with is Microsoft/Ask. The only way to really increase market share in search is build a better product, not buy a terrible one.

  2. Yahoo should buy Brightcove? Yeah, because they did such a bang-up job with the Maven Networks assets.

  3. How about Glam

  4. Any video space buy by Yahoo should be HULU, not an infrastructure player like brightcove, as ryan pointed out the maven deal failed to move the needle on the video strategy.

  5. Thanks for taking the time to offer your rebuttal, Mark. If you’ll indulge me, let me send a few suggestions back your way:

    • Microsoft and WebMD? Numerous reasons come to mind for skipping this proposal. For instance, the future of pharmaceutical advertising on the web, targeting both consumers and physicians, is murky at best, with new government strictures very likely. In addition, it’s hard to find a niche with lower barriers to entry than consumer health-care info: witness Waterfront Media’s speed rush to second place in this space from out of nowhere. The far more strategic reason for Microsoft to pass on this deal, though, is that it’s not strategic. Rather than diddling with vertical media markets, Steve Ballmer needs to make an acquisition that is transformative, yet builds on Microsoft’s core DNA as a software-development company (albeit one evolving into a provider of web-based and cloud-computing services). The smart mobile platform is the next big thing and Microsoft needs a horse in this race because Apple and Google are already mounted up. All this said, keeping MSN vibrant is important to Microsoft, so I suggest they commission BermanBraun to build a health-care site for them and let the fire hose of MSN traffic light it up. Gates and Ballmer may be many things, but mad men they’re not.

    • Microsoft buying Ask is the type of thinking that made Unisys the company it is today.

    • I advocated Google buy only Clear Channel Outdoor, not all of Clear Channel Holdings, so a $25 billion price tag is way off the mark. As for the fundamentals, OOH is a secular business that has been hurt by the economic and advertising downturn. At the same time, outdoor (like the Internet) is proving itself a net gainer of the total advertising pie at the expense of radio, TV, and newspapers. CCO, with deep exposure to national advertisers, will rebound strongly with the economy and is by no means in a spiral of downward revenue and profits. What’s more, if you think individualized messaging is some sort of Philip K. Dick science fiction, stop by the Googleplex some time. And I’ll be surprised if you leave there thinking that Google’s capital is best spent downloading movies and selling tchotchkes.

    • Scripps and Kayak? Scripps is a great content company. However, twice in recent years they have mistaken performance marketing – a.k.a. lead generation, the business Kayak is in – for content, and it has cost them dearly both times. They grossly overpaid ($560 million) for Shopzilla four years ago, and are now saddled with a middling performer in a hyper-competitive field. In 2006 they forked over an astonishing $366 million for uSwitch, 85% of which they wrote down the following year. That business was put on the block a few months ago and has supposedly been available for a song. But no one is even humming. It may not be true for everyone, but content is king for Scripps, so let’s hope they’ve learned their lesson and now stick to their knitting. Hmmm. Now that’s an idea…. The Knitting Channel. Get me Ken Lowe on the horn.

    • Finally, send Ted Turner to Montana? Please. If anything, his million head of bison out west already get way too much of his valuable attention. What’s more, no thinking person wants to see The New York Times get zelled, which is precisely why Turner’s mad genius is needed to lead the Times and CNN out of their respective wildernesses, creating the first truly great and global general news organization of the 21st century.

  6. I think Google is smarter than the ad portrays… They have the undersea cables in place; they have the data centers in place; they are not restricted by a poor business infrastructure (coaxial cable) and can afford to run Fiber. They could run Fiber to people's homes as Greenlight did in Wilson N.C. ($100 per month for 100MBps / 100 Mbps is way better than FIOS's limited 50Mbps / 5Mbps for $119 per month).

    So in reality, the Cable companies have nothing to offer any new up and comers. The future is Fiber to the homes. While the Telcos (wireline/wireless/Cable Cos) promised to run Fiber back in the 1990s and received US tax payer money to do so; they have back pedaled and avoided running any Fiber as they promised.

    A company like Google, simply does not need the Cable Companies and if they position themselves correctly with Fiber, they do not need the Telcos either.

    Like it or not, Google + Fiber would be one heck of a wonderful future for Americans. It would be a Public Relations coupe as well! The company that saved Americans Internet access from the evil oligopoly that has limited them for the last 20 plus years.

    Considering that the Japanese had 100Mbps / 100Mbps for $55 per month in 2000 thanks to Fiber; and using that same fiber, simply changing out the hardware Firewall/Router/Modem on either end of a strand of Fiber were able to offer consumers 1Gbps / 1Gbps for $52 per month by 2006. Hey competition does work, in Japan.

    Here its 2009 and the only company in American offering 100Mbps / 100Mbps Fiber connections for $100 per month is Greenlight. The telcos response, failed attempt to legislate the company away…pathetic. And I and many Americans are watching their anti-American legal + lobbying attempts in North Carolina and Washington D.C.

    A new player (Google or other Business) providing Fiber to homes for Internet access (and anything else, including streaming content such as TV, Movies and Videos) could take a small percentage of the American marketplace and be in the Black year one. Their cash flow would be approx $40Million – $70Million per month for less than 40% of the American Internet marketplace at $55 per month rates for ONLY 100 Mbps / 100 Mbps per month. Americans starved for Fiber Internet to their homes would gladly pay $100 per month (twice as much as in Japan and my estimate above) as long as it was not tied to any other service but packet passing and the Internet.

    I am sure I am not the only American without a television anymore. Why spend $1000 + when I can get my content via the Internet for the cost of a DSL connection…which in reality is faster than Cable due to Cable's band width shaping and throttling of Internet access. Bet most people do not run DD-WRT software on their Firewall/Router and are unaware that except for the "Speed Test" they are throttled to less than 400Kbps down and 40Kbps upstream. (And they promise up to 16Mbps down / 1000Kbps up…you never see it, thanks for nothing Cable companies!)

    The Cable Companies and telcos, after ignoring their infrastructure and NOT running Fiber all the way to consumer homes (just to the neighborhood does not cut it) simply will NOT be able to compete…watch their stock price then…

    So at $100 per month for 100Mbps / 100Mbps a company could have gross sales of $80 Million – $140 Million per month assuming around 40% of the American market. As Provost on Survivor would say, "Worth Playing For?" Absolutely.

    If they stood on the street corner with a Fiber modem and service, they would sign up 95% of Americans tomorrow. Imagine their profit then…

    New companies interested in providing Fiber to Americans definitely do NOT need the telcos, in fact to get in bed with the telcos could only hurt their bottom lines through poor peering agreements limiting their growth and that would be a mistake!

    Fiber to our homes, not a matter of IF, ONLY WHEN.

    I for one will never forgive the Telcos and Cable Companies for failing to live up to their 1990s era promises of Fiber to our homes. They took our tax money; politicians let them add in Fees (many are still in your bill today, though you do not have fiber),

    "Where's the Fiber?" (Think 1980's Wendy's Where's the Beef commercials and you have the right tone!)

    It will be interesting to see how the Telcos/Cable companies spin their PR to cover their deceit. As for this American, I call it FRAUD!

  7. Boy some of the worst ideas I have heard of on both sides of the ledger demonstrating a clear lack of understanding of each acquirers strategic strengths and weaknesses. MSFT is falling behind both Apple and Google on the mobile web. While MSFT’s new mobile op system is much better than the past, it is not keeping up. Eric Schmidt recently pointed out at the current pace of computing power improvements, mobile phones will be 100x more powerful in 10 years and that is where we will be doing much of our business in the futue. Securing its position as a mobile OS provider is absolutely critical to MSFT. Hence, it must both build a great and super flexible system and find a hook. I think that hook could be twitter since twitter is at its core a group communications service.

    Google buying an outdoor provider? You must be kidding me. Google’s aim is to leverage cloud computing to control and leverage as much of the world’s data as possible. That’s why they are scanning every book ever written and geocoding everthing in the universe. The data piece they are struggling with is social media and human interaction. Enter facebook as the acquisition it should make.

    CBS buying Meredith? Paalease. Meredith is mostly a paper based provider (read dying on the vine). I guess if you could buy it for half the price it currently trades at maybe, but frankly what CBS needs is a digital content strategy. They would be much better buying WebMD. The FDA is not going to shut down pharma advertising and consumers continue to crabe health content. WebMD is the clear leader. But, that would only be one acquisiton. They should think about buying AOL or Yahoo who both have a deep content portfolios. So here at least Mark May and I agree.

    As for Ted Turner, he should just do what he’s doing. CNN is extremely well run already and wouldn’t be better with Ted.

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