August 15, 2007 4:00 AM PDT
Big media hunts for Web cred, again
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Few would disagree that big media companies need online properties, and it's often cheaper and more efficient to acquire than to try and build something in-house. If a company didn't have the foresight to create similar online brands in the Web's earlier days, purchasing existing online properties can vastly speed up the pace of "going digital."
According to Alan Mutter, had Dow Jones started generating more online financial data a decade ago, it wouldn't have had to acquire MarketWatch for $520 million in 2005. "It's a classic example of how the old media companies have been extremely slow to adapt to the new opportunities posed by (new) technologies," Mutter explained. "They are trying at a late date to acquire."
In fairness, Dow Jones online properties like MarketWatch and The Wall Street Journal Online are hardly flops. In the second quarter of 2007, the pay site WSJ.com boasted 983,000 subscribers and currently claims 7 million monthly unique visitors, according to the company; MarketWatch claims 6 million.
Then there's the built-in audience factor. By purchasing TreeHugger, Discovery Communications did a whole lot more than just acquiring a blog for its new Planet Green channel, said Neal Ungerleider, who writes for Mediabistro's FishbowlNY blog. (Last month, Mediabistro.com was acquired by Jupitermedia.)
"TreeHugger already has a large readership, and they already have a well-developed internal staff," he said. "You're already acquiring a stable of talent and a readership that can't be created simply by creating blogs for your newspaper or magazine." Consider it akin to a news network shelling out the cash for a big-name anchor rather than saving money on an unknown face.
Unfortunately, it doesn't always go over so well with the user base--just think of all the fake Rupert Murdoch profiles that turned up on MySpace after the social-networking site was acquired. TreeHugger's left-leaning visitors who posted comments, for example, were split about the prospect of big-media ownership. "The risk is that even if Discovery is a great partner now, it will be bought out by Rupert Murdoch or some other ultra-conservative," one said, adding that "you just never know what will happen when you transfer control to a large corporate entity." Another said, "I do understand that Discovery will help the message grow, but does it have a heart?"
There's one good piece of advice for acquisition-happy media companies: keep the newly purchased properties intact.
"I think everyone has (learned). Even the tech companies have, and certainly the big media companies have," said Kaboodle's Chandra. "Everyone we talked to, the first thing they all told me was, 'Don't worry, we're going to leave you completely intact.' That was the first assertion."
If all goes as planned, that kind of hands-off approach can give a new acquisition access to the advertising and infrastructure resources that a big parent company can provide without ticking off its audience.
"Particularly for social media sites, where there is a huge community involved in developing the site and really powering the site, in our case, we owe it all to our users and it's really important to leave that community intact," Chandra said. "There's a magic in creating that social community, and that magic is not easy to replicate."
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