• Ross Fadner, Nov 17, 2008, 11:16 AM
  • Battered Media Shares Look Cheap Reuters Have media stock prices bottomed out yet? That's the multi-million dollar question facing investors of Time Warner, News Corp., Disney, Viacom, CBS and other major media firms. According to analysts cited by Reuters, media stocks are looking mighty cheap these days, although they disagree on where the sector will bottom out.

    On the one hand, it can't really get much worse: S&P's Movie and Entertainment sub-industry index is down more than 42% so far this year, compared to a 45% overall drop for the Dow Jones Industrial Average. Analysts pointed out that media shares are often the first to be shed from a portfolio in a downturn, but they are also among the first to scooped up as consumer sentiment strengthens.

    According to S&P, declines in consumer spending should last through mid-2009. Tuna Amobi, an analyst, says this indicates that media investors will have to wait at least until then for a rally, as consumer discretionary income is "highly correlated" to gross domestic product growth. "The good thing is that these companies lead the rally," Amobi said. Larry Haverty, manager of the Gabelli Global Multimedia Trust, said the bottom looks imminent. "I think the stocks are very, very cheap," Haverty said. "These are very very significant buying opportunities." x Read the whole story...
  • VC Model Isn't Broken GigaOm In a recent address at Harvard Business School, Adeo Ressi, founder of VC rating site TheFunded, proclaimed that the VC industry is "broken" because VCs are chasing too few opportunities. As a result, VC returns over the past five years have fallen below the total amount of money invested over that same time period. Certainly, that's bad news, but is this enough to proclaim the demise of the VC industry as we know it?

    Hardly, says GigaOm's Matthew Ingram. While it's true that too many funds are popping up and pouring money into startups in the hope that they'll become the next Facebook or Twitter (two companies whose expenses far outweigh revenues, by the way), Ingram says the VC industry is still subject to the same laws of supply and demand as any other industry. When the likes of Google and Microsoft are gobbling up startups, returns are high, sparking a wave of copycat companies trying to gain funding by recreating others' success. When the likes of Google and Microsoft stop buying companies and the IPO market grows cold, the supply of VCs and companies overwhelms demand, and there is a contraction.

    Just because the VC industry is starting to contract, "doesn't mean smart VCs can't prosper by concentrating on what they know, or by staying small enough to get more 'home runs.'" As Ingram notes, "The VC industry isn't broken any more than any other boom-and-bust industry is broken." Read the whole story...
  • Report: Hulu To Match YouTube In U.S. Revenue Next Year Silicon Alley Insider eHulu, the joint online video venture from News Corp. and NBC, looks poised to match YouTube in U.S. advertising revenues next year, according to a new estimate. This is shocking, considering that YouTube has more than 10 times as many monthly visitors as Hulu (83 million vs. 6 million). Nevertheless, Screen Digest is forecasting that both Hulu and YouTube will earn $180 million in revenue in 2009. The research group estimates that YouTube will make $100 million in U.S. revenue this year, compared to Hulu's $70 million.

    Silicon Alley Insider points out that Screen Digest is most likely talking about gross revenue. Hulu actually passes along about 70-80% of revenue through to its content providers, so Hulu's net revenue is probably closer to $14-$21 million. YouTube also shares some revenue with content providers, but a far smaller percentage.

    Even so, the fact that an eight month old startup can book nearly as much revenue as a company that Google bought for $1.6 billion two years ago has to be troubling for the folks at Mountain View HQ. That may be, but Henry Blodget thinks the addition of search placement ads on YouTube will help boost YouTube's revenues next year and take advantage of the site's enormous traffic. As Blodget says, due to its size, "YouTube still has the ability to squash Hulu" if it ever gets serious about striking professional content deals that benefit both sides. Read the whole story...
  • Music Startup Borrows From 'American Idol' The Wall Street Journal The Wall Street Journal profiles a new Web startup that combines aspects of social networking, "American Idol," and online multiplayer gaming.

    Called Music Mogul LLC, the startup will next week unveil a new virtual world that allows members to upload videos of themselves performing to compete for a three-song demo deal with a production company. Inside the virtual world, users can also attend virtual concerts as well as events with real-life celebrities, play games and complete missions to increase their status on the site.

    Analysts and industry experts believe one of the keys to the growth of virtual worlds is combining social networking and videogames in a way that would attract an even broader audience. The Journal says that Music Mogul, which will launch in the first quarter of 2009, is designed to attract teenagers and young adults who aspire to enter the music business by giving them a simulation of the experience. The site echoes "American Idol" in that members will vote for the best video performances every quarter. The top performers are then brought to L.A. to compete in front of a panel of celebrity judges. The winner gets a demo deal with Dark Child Productions. Read the whole story...
  • Why Yahoo Still Matters Advertising Age Yahoo shares may have fallen from $33 to $10 in the past twelve months, but the Web giant is still far more valuable in the eyes of Madison Avenue than it is in the eyes of Wall Street. Indeed, size still matters to Madison Avenue.

    "Advertisers are looking at where's the traffic, volume and value is today. And today is very positive for advertisers at Yahoo," said Chris Moloney, chief marketing officer at Scottrade. "Google is considered to be the 800-pound gorilla of the internet but it doesn't have content the way Yahoo does. It receives a massive volume of traffic." In fact, so big is Yahoo's audience base that Chrysler's chief marketing officer, Deborah Wahl Meyer, says she considers Yahoo "almost as a fifth (television) network."

    Buying the home page is key. According to Chrysler, a home-page buy on Yahoo is worth 75 TV ratings points, or about four 30-second spots on a hit prime-time show such as ABC's "Desperate Housewives." Meanwhile, Wall Street is showing the stock, which is languishing in the $10 range, no love. Aimee Reker, senior VP-global director of search for MRM Worldwide, said she thinks Yahoo is "undervalued," noting that not only does Yahoo have scale, it has scale against its own content. Read the whole story...
  • Obama To Give Weekly YouTube AddressThe Washington Post Read the whole story...
  • Online Ad Growth Flattens Out TechCrunch Read the whole story...
  • The End Of IM BusinessWeek Read the whole story...
  • How Google Can Get Its Groove Back Silicon Alley Insider Read the whole story...