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Old-school rules at new-media meeting

Nation's leading Internet journalists wrap up annual meeting with news that old-media habits die hard.

HOLLYWOOD, Calif.--The nation's leading Internet journalists wrapped up an annual meeting here this weekend, confident that the World Wide Web is creating a new world order in a business dominated by a handful of large corporations.

Speech after speech, discussion after discussion at the fifth annual meeting of the Online News Association (held at the same site as the Oscars, no less) pointed to the innovation, creativity and the chutzpah of this up-and-coming medium: bloggers and Web-only media outlets scooping the big publications' "affiliated" and "repackaged" Web sites; new Web site designs that are bringing young readers back into the journalism fold; and an interactive "community" approach to news that is breaking down the barriers between media outlets and their audiences.

Think again.

Behind the scenes, a much different, old-fashioned scenario was unfolding, backing up the notion that big media companies keep getting bigger by gobbling up their competition. One rumor buzzing around the conference--that Dow Jones would gobble up CBS MarketWatch, a competing financial news outlet--proved accurate Sunday night when the deal was confirmed.

Sources said other bidders had included Yahoo, The New York Times Co. and Viacom, but Dow Jones' higher-than-expected $18-per-share offer proved too rich for their blood. (Saturday night, sources said the others had given up on trying to outbid Dow Jones--barring a last-minute hitch.) True, these others were media giants, but with one important difference: None was a direct competitor, like Dow Jones.

The idea of a Viacom deal had been exciting because it offered to create a powerful online media empire, linking general news (CBSNews.com), financial news (MarketWatch) and sports (SportsLine). As for The New York Times, MarketWatch would have helped extend its brand, perhaps with better luck than an ill-fated deal with Street.com at the height of the Internet boom. The Yahoo deal would have put the news aggregator squarely into the original content business, challenging established media heavyweights. But none of these companies was willing to take a big enough risk.

Instead, MarketWatch got bought out by a direct competitor that has lagged, not led, the revolution to publish free news on the Internet, despite the potential to break news during market hours and send stocks soaring--or tumbling. Now Dow Jones is catching up.

Like all media mergers, MarketWatch's buyout by Dow Jones is creating high anxiety among MarketWatch's rank-and-file journalists, who fear that their jobs will be eliminated to cut costs. Dow Jones is based in New York, while MarketWatch is based in San Francisco.

MarketWatch Chief Executive Larry Kramer was supposed to join a panel at the conference, but he canceled because he was negotiating the deal. Sources said Kramer, who co-founded MarketWatch, favored a buyout by Viacom, largely because it would have been the least disruptive deal, as Viacom is a large MarketWatch stakeholder.

But Dow Jones' offer proved too lucrative. Now the most direct Internet competitors of the Dow Jones-MarketWatch alliance include Street.com (a smaller Web-only outlet), Forbes, Fortune and Business Week (all magazines) and Yahoo Finance (an aggregation site).

During the conference, news also leaked out (and was reported first by CNET News.com) that Neil Budde, the founder of the Wall Street Journal Online, had joined Yahoo. But sources said Budde's hiring does not signal that the news aggregator will build a newsroom; rather, the company will "repackage" existing material from television and print, like the work of financial columnist Suze Orman.

MarketWatch's buyout by Dow Jones isn't the only example of consolidation in Internet journalism. Sources at the conference said The Washington Post is close to acquiring Slate, another Web pioneer of original Web content. Slate, which is owned by Microsoft, focuses on political reporting, much as the Post does.

Do these deals mean that Internet journalism is doomed to become an appendage of existing print and television giants? No, but it's a reminder that the media business hasn't changed much, despite the Internet revolution. The old adage, "eat or be eaten," still is alive and well.

CNET News.com's Jeff Pelline is a board member of the Online News Association.