Wednesday, January 12, 2000
Media getting feet wet on Net
Plunges like AOL uncertain
BY SETH SUTEL
The Associated Press
NEW YORK — Like most major media companies, Time Warner Inc. did not have a firm, publicly articulated Internet strategy. Until Monday.
Now, thanks to its massive merger with America Online Inc., Time Warner has a committed, strong partner for its voyage into cyberspace.
So far, the other main conglomerates — Walt Disney Co., Viacom Inc., CBS Corp. and News Corp. — have been mainly going it alone or are still in the process of feeling their way in the online world.
The AOL-Time Warner deal certainly raised a lot of questions about how the other big players will examine the issues of the Internet and on line distribution of media in the future. But it didn't supply clear answers for how they should proceed.
Part of the reason, of course, was that AOL was a unique animal. Not only was it the largest Internet service provider in the nation, but it also had a clear brand image as a wholesome, easy-to-use entryway into the Internet.
AOL also had top-caliber management and more credibility on Wall Street than many of its peers, making it a more viable marriage partner for a venerable institution like Time Warner.
But another factor causing uncertainty for the big media companies is that there is still some disagreement over the necessity of a media company's owning its own distribution channels, especially in the rapidly evolving world of the Internet and online media.
“I don't think anyone knows what the Internet is going to look like over time,” Merrill Lynch analyst Jessica
Reif Cohen said. “Traditional media companies will definitely participate in the Internet, but it's uncertain whether they'll buy their way in or develop their own” operations.
For Time Warner, the deal provides top online expertise, a customer base and a direction forward.
The company has been rolling up its earlier Net project, Pathfinder, which proved to be a flop, and in June named Chief Financial Officer Richard Bressler to head up a new Internet charge.
Other media companies are still just getting their feet wet:
• One week before the AOL announcement, CBS took its first major step in an Internet strategy, forming an online division and naming an executive to head it up.
• CBS's merger partner, Viacom Inc., has dabbled a bit in cyberspace with its MTV and Nickelodeon networks, and hopes to float shares in the online operations associated with them.
• News Corp. has made a series of Internet investments in places like financial news provider The-Street.com.
• Only Disney, which owns ABC, and General Electric Co.'s NBC have gone so far as to form separate divisions focusing on Internet business and sell shares in them to the public. But those companies, Go.com and NBCi, were formed only last fall.
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