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HolidayBuyer's Guide
Internet

Old media shop for new media

While analysts talk of the coming convergence with PCs and TV, media titans such as Disney and NBC are snapping up established Net brands.

While industry pundits and analysts talk of the coming convergence between personal computers and television, media titans such as Disney and NBC are snapping up Internet media brands, and rumors of other "old" media companies shopping for new media companies abound.

"Long before Portalopoly this PC-TV convergence, we're actually seeing an old-new media convergence," said Gregory Wester, director of Internet marketing strategies for the Yankee Group.

The two phenomena work hand in hand, he added. The deals being made today between the Disneys and Infoseeks of the world "are going to pay off when we see PC-TV convergence.

"'Must-see TV' is 'Must-advertise TV,'" Wester noted. "Now they need 'Must-see PC.' They're great at corralling an audience for three hours on a Thursday night. Now [they're thinking], 'How do I corral users on a PC?'"

Simple: by buying companies that already are doing it through portals.

Ever since the Web began taking off as a commercial endeavor about two years ago, people from various segments have been predicting that one day the new media success stories--such as Yahoo, Excite, and to some extent America Online--would be overtaken by established stalwarts such as Disney and Time Warner or telco titans like AT&T.

But so far, the nimble, young Web companies have been leaping past the older guys that have struggled to keep up in the new medium, in spite of their deep pockets.

"They just don't get it" is a phrase heard often enough in new media circles to have become a kind of mantra.

But here's the rub: they don't have to get it. "In the build vs. buy debate, buy is the clear winner," said Adam Schoenfeld, a senior analyst with Jupiter Communications. "Real entrepreneurs built these brands, but deep pockets make up for a lot of mistakes."

In other words, Disney, despite its multipronged effort on the Web, has not become even half the sensation on the Net that Yahoo or AOL has, but by snagging a portal site like Infoseek, it just might be able to make its mark.

The same goes for NBC, which recently bought a stake in portal Snap. (Snap is a division of CNET: The Computer Network, publisher of NEWS.COM).

Now it's a question of who's next. Since two of the smaller portal players, Infoseek and Snap, have been claimed, it makes sense that Lycos could be next, said both Wester and Schoenfeld. Lycos's stock is less expensive than that of its bigger cousins, Yahoo and Excite.

Still, Yahoo and Excite could be next to cut deals. AOL, the world's largest online service and a formidable competitor in the portal war, already rejected a takeover bid from AT&T.

"Yahoo and Excite have done a tremendous job of building brands, but they may need a traditional media partner at some point," Schoenfeld said.

"Portals are going to be very valuable," he added. "This is the most overused term in history, but there's a lot of synergy between content and the traditional pieces of the portal."

In a few years, Schoenfeld noted, "these deals could look relatively cheap."