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FIM-Google: Levinsohn: “When Sergey Comes Down, They’re Pretty Serious”

It took five days to make a deal that answered a question raised before Fox Interactive Media was even launched, let alone acquiring companies: what would be the best way to handle search? Both the speed and the delay are typical News Corp. traits. The time it took to decide on a deal and finalize myriad details with Google — no strings left untied a la AOL-Google — is roughly twice the time it took to buy MySpace. When I asked Ross Levinsohn, president of FIM, about that during an interview late Monday, he responded with a comparison to the scene in Braveheart (yes, he knows it’s bad timing) when Mel Gibson’s William Wallace holds his warriors back until the very last minute in the face of an English attack. “When they move they move with incredible swiftness and fury,” he said. “We could easily have jumped a long time ago. We had plenty of opportunities six months ago in search. It paid off for us to wait; we got to understand our audience a little better, we got to understand the market a little better. Our properties grew in that time. We’re certainly approaching it differently in the last three months than we had in the previous six.”
Google’s push went into gear a couple of weeks ago with a visit to FIM for a broad-based discussion. Last Wednesday, a team led by co-founder Sergey Brin went to Pebble Beach during the News Corp. summit. “When Sergey comes down, they’re pretty serious,” said Levinsohn. Brin didn’t the whole time; he didn’t have to. The execs involved clicked and by the end of the roughly eight-hour meeting, the deal was well on its way. He thinks the deal would have moved quickly whichever company was chosen.
Other options: “We looked at everything. We looked at doing hybrids, we looked at partnering, we looked at buying, we looked at building. … We met with dozens of companies. At the end of day you realize what you’re really good at is a couple of things … you’re really good at creating content, you’re really good at enabling content, you’re really good at selling big Fortune 1,000 companies on branded advertising and sponsorships. What you’re not really good at is competing with giants like Google and Microsoft and Yahoo in search. And so you take advantage of what you’re good at.”
Mobile and video: The deal includes most of FIM’s properties; FoxSports.com has several years to go as the sports anchor for MSN. (The Fox cable and broadcast sites aren’t included either.) The deal doesn’t cover mobile or video. Levinsohn: “This was about taking the properties that we’re really invested in and maximizing our value on them with the right strategic partner. Mobile is something we’re just launching with our properties. … Video. MySpace gets no credit for its video section and yet it’s second biggest to YouTube … We are continuing to work on a broader video strategy utilizing our content.”
Comparisons to AOL-Google: Last month Rupert Murdoch said he wanted a search partner who would give what AOL gets with Google. That’s not the deal that was cut. Levinsohn: “AOL has been around a long time and has a big audience. The deals are completely different. We were just trying to do the best deal we could. We didn’t really have any expectation in terms of numbers. We were focused on three things: one, what company would provide the best experience for the users; two, what were the economics and three; who could be a real strategic partner for us. I think we accomplished those things.” But FIM also wanted a guarantee. “We felt like we had strong enough properties that warranted a guarantee and we were pretty focused on that.”
The $900 million guarantee: Even though the $900 million guarantee covers roughly two-thirds of the money News Corp. spent piecing FIM together thus far, Levinsohn says that wasn’t the deciding factor. The guarantee will be paid out monthly over the course of the three year and nine months of the contract — the length matches News Corp.’s fiscal year — but not on a flat line.
Beyond the deal: “It will actually help us define more clearly where we’re headed. … We all felt — Peter (Chernin) and Rupert especially — felt like this was one of the biggest decisions we were going to make.”
Related: Fox Interactive’s Call For A Search & Contextual Ad Vendor Answered: Google; $900 Million Guarantee