Monthly Column: Digital Deal Notes: Nov 2005

(by Tolman Geffs, The Jordan, Edmiston Group, Oct 2005): It’s all about content. We are seeing a burst of initiative, creativity and deals as major media companies look to become content producers and programmers for the web.

Early interactive efforts by the majors mostly repurposed offline content. While that worked well in building new businesses, it is not enough to offset the profit erosion (largely inflicted by the internet) in the traditional media properties.

At the same time, the Internet’s transformation of media audiences, distribution and revenue is accelerating. Broadband penetration has hit critical mass, and broadband users spend much more time online (52% more that dial-up users in the 18-34 age group, according to the OPA). Driving this is a virtuous cycle of evolving consumer behavior and new forms of content that fill the pipes and attract the audiences. New forms of content like blogs, original video, aggregation and social networks on the consumer side, and lead generation directories in B2B.

More in the extended entry….


Looking ahead, major media enterprises will increasingly drive new value through building and buying original online content. We are seeing that in original online programming initiatives like CBS “cable bypass” broadband news channel and Scripps original web video programming. And we are seeing it in recent deals like the announced purchase of CSTV and its network of college team websites by CBS, sister MTV’s acquisitions of IFILM, and AOL picking up Weblogs Inc. This trend really began with NY Times purchase of About, billed as the internet’s largest source of original content. It’s all about driving new value through creating and owning original online content.

October was a medium-busy month for deals, including VeriSign’s acquisition of content aggregator Moreover for $30 million. A total of 13 interactive content and services deals were announced, worth about $370 million. The largest was in B2B, the sale of fashion industry information provider Worth Global Style Network for $245 million to UK media conglomerate Emap, publisher of FHM and lots of other stuff. Other notable deals included AOL/Weblogs and MTV/IFILM above, and the sale of EmailLabs to J.L. Halsey. We expect the pace to pick up in coming months, driven mainly by new content deals like the rumored potential sale of iVillage.

Tolman Geffs is a managing director with The Jordan Edmiston Group (JEGI), a New York-based investment bank founded in 1987 and focused on the media and information industries. Tolman was previously CEO of Internet Broadcasting Systems (IBS), the largest online television network. You should assume that Tolman and his firm have or will do business with companies mentioned in this column.

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