VSS: Don't Count Out Old Media Yet In Digital Future

Don't count out media's old guard in the battle for the new media landscape, says John Suhler, founding general partner and president of private equity firm Veronis Suhler Stevenson.

"Existing media brands have exploitable potential in all the new mediums," Suhler explained during Media magazine's Forecast conference on Tuesday. "Their audiences are already pre-sold on something of value," he said, adding: "Traditional media, if they really get it, will benefit greatly."

And if investing in new platforms qualifies as "getting it," then it looks like traditional media is on its way. Indeed, having seen the light of a digital future, traditional players are now growing their online and mobile platforms faster than pure-play new media companies, according to data from VSS research partner PQ Media.

Last year, pure-players like AOL and Yahoo spent $32 billion on platforms, which amounted to a 10.3% compound annual growth rate (CAGR), VSS found, using data from research partner PQ Media. Traditional media, meanwhile, spent $27 billion on platforms, but at a CAGR of 40.6%.

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"The growth today and in the future is coming from established media brands," Suhler said. "That's a huge story."

By 2009, VSS and PQ Media predict that spending by traditional media on online and mobile platforms will actually surpass the pure-play spend, according to Jim Rutherfurd, managing director at VSS. And by 2011, the old guard will shell out $68 billion at a CAGR of 20.4%, while pure-players will spend $63 billion at a CAGR of 14.7%.

The biggest and brightest example of traditional media investing in new media platforms appeared just this week in the form of Hulu.com--the joint venture between NBC Universal and News Corp. designed to transform the way consumers experience long-form content by giving it away across limitless touchpoints around the Web.

Michael Wolf, former president and COO of MTV Networks, agreed with Suhler, but offered a stark picture of a media landscape made up of "defenders and attackers"--or stilted and bloated old dogs versus more nimble and technologically savvy young Turks.

"The traditional companies can hold onto their audiences and ad dollars," said Wolf, who is now director and global practice leader at consultancy McKinsey & Co. "The attackers," he added, "do have a tremendous advantage ... many of the defenders are in for a rude awakening."

Suhler is holding out great hope for the mobile medium, saying online is clearly where media's energy needs to be focused. "It's affecting everything in the broadly defined media business," he said.

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