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Entertainment execs explore Net frontier

A growing number of Hollywood power brokers are branching out from the movie studios and transforming into Internet entrepreneurs.

A growing number of Hollywood power brokers are branching out from the movie studios and transforming into Internet entrepreneurs.

The latest example occurred this week Michael Ovitz when former Universal Studios head Frank Biondi Jr. and Jules Haimovitz, president of MGM, invested in television and Internet programming company NewsNet Central. The pair joins a growing list of Hollywood insiders--such as former Walt Disney president Michael Ovitz and USA Networks chief Barry Diller--attempting to pave a new path for themselves on the Internet.

Observers say the Internet has rekindled the executives' desire to create major media and entertainment businesses from scratch and offers the ability to do so outside the established studio system.

"These guys mostly didn't get to be media moguls by accident," said Charles Conn, See related newsmaker: Charles Connchief executive of Ticketmaster Online-CitySearch. "They have an eye and ear for what works with large audiences, and they see the beginnings of mass market appeal on the Net. They are idea guys who like to make money--and where are early-stage ideas more valued than on the Net?"

Some analysts note that there are fundamental similarities between creating entertainment and Internet businesses.

"If the name of the game is eyeballs, and the name of the game is getting content to as many people as possible, then it's not different at all," said Jae Kim, an analyst at market research firm Paul Kagan and Associates.

Michael Ovitz, who once headed talent agency Creative Artists Agency, has turned his investing eye toward a number of Internet start-ups of late.

Ovitz, together with Yucaipa Companies partner and former Disney Online president Richard Wolpert, recently invested in companies including online chat community TalkCity, game and entertainment firm GameSpy Industries, and broadband search engine Scour.net. And last month, the pair launched CheckOut.com, an entertainment-oriented e-commerce site.

Barry Diller has turned into a See related newsmaker: Barry DillerWeb mogul in his own right. The one-time Paramount Studios head and Rupert Murdoch right-hand man at the Fox Network has made a number of high-profile Web investments.

A year ago, Diller took a controlling stake in local guide network CitySearch, which he merged with Ticketmaster Online. In July, Ticketmaster Online-CitySearch acquired the city guide portion of Microsoft's MSN Sidewalk to increase its presence in more cities across the United States.

Diller's best-known move on the Web was his failed attempt to acquire Web portal Lycos. Diller wanted to fold his existing Web sites, such as Ticketmaster Online-CitySearch and the Home Shopping Network, into Lycos and create a major e-commerce play. But shareholders such as CMGI chief David Wetherell protested the deal when Lycos's stock took a nosedive after the deal was announced.

These executives see the potential for the Net to change the face of entertainment as it exists today, according to Peter Clemente, vice president of market research firm Cyber Dialogue. They see the interactive nature of the Net as a way to develop more one-to-one relationships with consumers. Those relationships would allow entertainment companies to target advertising and other offers more directly with consumers, potentially making them a lot of money.

In addition, interaction via the Web would allow entertainment companies to test out story lines and movie trailers before they spend millions on marketing costs, Clemente said.

"These guys who are breaking off and doing Internet start-ups understand that reinventing the way entertainment is produced, distributed, and marketed has the potential to really increase the success rate of entertainment products," he said.