Comcast’s announcement that it is acquiring online movie ticket site Fandango was surprising at first blush but once you look under the surface it makes a lot of sense — especially when you consider it alongside Comcast.net and the plans, also announced today, for a new site built around Comcast’s innovative video player The Fan. For one, its profitability for the last several years and its prospects — advertising is already 50 percent of revenue and growing while ticket sales also are growing — fit with the investment strategy for Comcast Interactive Media. Also, Fandango wasn’t being shopped around; Comcast went shopping for it, no doubt adding to the appeal. Fandango has a strong management team that will stay in place and it should mesh with Fancast.com, slated for a summer launch, while getting a boost from Comcast.net. While remaining standalone sites with their own urls, all three should benefit from the serious cross promotion being planned — at least, that the plan.
When I spoke with Amy Banse, president of Comcast Interactive Media, about the deal and how it fits in, she reminded me of CIM’s mission: “We’re generally charged with creating, building, and acquiring online entertainment and information properties.” CIM is separate from Comcast’s ISP business.
Fancast: Planning for Fancast.com, a site that not only would help people find programming across multiple platforms but would deliver some via its own player, began soon after the unit was formed. “Fancast is a one-stop shop,” Banse explained. The user will type in whatever he or she is looking for — a program, a director, an actor, etc. — and will get search results that all the info about the show plus where it’s available on TV, VOD, online, the movies. For instance, type in “Pirates of the Caribbean” now and you might get where and when the first two are playing on cable, how to get them on DVD or VOD; next month, the movie listings for #3 would show up, too. In addition, it would provide info about the show, the actors, promotional clips and video. The next step would be to provide access — E-mail reminder? download if possible? Link to where to buy the DVD? Etc.
Why Fandango?: CIM was in the process of building Fancast and Fandango came up. Banse explained: “It’s already a great online entertainment brand. It has some nice traffic, which we think is very complementary or consistent with traffic on Comcast.net or that we want to do on Fancast. … It was a nice acquisition for us both from the perspective of a standalone business and from the synergistic fit with the rest of what we were trying to accomplish.”
Business models: Fancast will be ad-and-sponsor supported. No details from Comcast, but given the interest in delivering content through the video player I’d expect revenue sharing with content providers also to play a role. I’d also expect e-commerce as part of the equation through merchandise and movie ticket referrals.
Price: Banse wasn’t going there and estimates vary wildly. What we do know: the amount is not material and does not have to be reported by Comcast. As for the price or even the range, we’re still working on it.
Rafat adds: The company has at least $50 million plus pumped into it in venture capital: $15 million in investments from the exhibitors and $15 million from Aecretive Technology Partners and General Atlantic Partners in the first round; $5 million in a second round from the previous investors (2001); $15.3 million from Technology Crossover Ventures (2003); and it looks like another late round last year, according to an SEC filing. There could have been more, though. On the sale price, THR quotes an analyst (Jeff Wlodarczak of Wachova Securities) saying the price could be around $200 million. We are still on the fence on this one.
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