Big Media Again Targets Internet

Jul 25, 2005  •  Post A Comment

This time, things will be different.

That appears to be Big Media’s promise as it revisits the online realm with a series of Internet investments designed to take advantage of the Web’s increased popularity with consumers and advertisers.

The most recent example of this growing trend came last week when, just days after launching a reworked interactive division, Rupert Murdoch’s News Corp. inked a deal to buy Intermix Media for $580 million cash. Intermix owns more than 30 Web sites, the most notable of which is the social-networking site MySpace.com.

News Corp.’s purchase almost instantly catapulted the media giant to player status in a space where the company previously had a rather low profile. Thanks largely to the popularity of MySpace, News Corp.’s Web traffic is expected to double to 45 million unique monthly users once the deal closes later this year.

The transaction came just three days after News Corp. announced the creation of Fox Interactive Media, a new unit that will manage and bolster News Corp.’s stable of online brands, including Fox.com, Foxsports.com and Foxnews.com.

The deal follows other Internet investments made by companies including The Walt Disney Co., and Time Warner’s efforts to beef up its America Online service by offering a raft of services and features to all Web surfers, not just those who are paying customers.

In some ways, the present online push by Big Media recalls the late 1990s, when major entertainment companies were falling over themselves to gain a Web presence. However, those efforts largely fell flat, due in part to the relatively small number of households with high-speed data connections and the companies’ mass-appeal approach to a medium that was very much about individualism. The failures were compounded by the dot-com implosion that took place at the turn of the millennium.

It’s a lesson that most big media companies have generally learned, said Gary Arlen, president of Arlen Communications, a Bethesda, Md.-based technology consultancy.

“It’s very much a different business today,” said Mr. Arlen, who noted that broadband is more available today than six or seven years ago. “It’s truly interactive.”

While companies such as Disney and Time Warner have played in the space for years, News Corp. has had less of a presence, creating an interactive unit in the late 1990s only to shut it down in 2001. However, indications are the company has learned from any mistakes made during that first go-round and has decided to get serious about having an online presence.

How? For starters, the company hired a highly regarded Web guru, Ross Levinsohn, as president of Fox Interactive. Then there’s the Intermix deal.

“This acquisition is a major step for News Corp. as it attempts to improve its competitive positioning in the strategically important online space, an area where the company trails its key rivals,” said Merrill Lynch media analyst Jessica Reif Cohen in a research note.

And there’s good reason for News Corp. to jump on the online bandwagon: Advertisers have. While all advertising swelled nearly 10 percent in 2004, online advertising surged 21 percent to $7.4 billion last year, according to TNS Media Intelligence.