News Corp. grabbing new media by horns

By Dianne Mermigas
CHICAGO -- Just when you have mustered enough courage to look the new-media beast straight in the eyes, it starts growing two other heads.

That's the way any person or company involved in media, entertainment and information has to be feeling these days as they wrestle with the new rules of play in digital broadband interactivity only to find that there is more new media where that came from.

Just ahead are such things as WiMax (wireless Worldwide Interoperability for Microwave Access), Internet2 (a kind of advanced Internet on steroids developed by universities), 3G (the third generation of digital wireless on cell phones) and critical mass VoIP (Voice over Internet Protocol) -- each with their own technological characteristics, economics, consumption patterns, challenges and opportunities.

So it takes a lot of guts to jump into the new-media abyss, as News Corp. has done, most recently with the announcement of its My Network TV: an obvious name play on its MySpace social-networking Web site and its Fox-branded broadcast and cable program networks.

Of course, if News Corp. is smart -- and it is -- the new program service will not be anything like the latter.

Feb. 28, 2006

News Corp. grabbing new media by horns

By Dianne Mermigas
CHICAGO -- Just when you have mustered enough courage to look the new-media beast straight in the eyes, it starts growing two other heads.

That's the way any person or company involved in media, entertainment and information has to be feeling these days as they wrestle with the new rules of play in digital broadband interactivity only to find that there is more new media where that came from.

Just ahead are such things as WiMax (wireless Worldwide Interoperability for Microwave Access), Internet2 (a kind of advanced Internet on steroids developed by universities), 3G (the third generation of digital wireless on cell phones) and critical mass VoIP (Voice over Internet Protocol) -- each with their own technological characteristics, economics, consumption patterns, challenges and opportunities.

So it takes a lot of guts to jump into the new-media abyss, as News Corp. has done, most recently with the announcement of its My Network TV: an obvious name play on its MySpace social-networking Web site and its Fox-branded broadcast and cable program networks.

Of course, if News Corp. is smart -- and it is -- the new program service will not be anything like the latter.

If the whole point of My Network TV is to provide an entertainment and news content link from the peculiar Web site that is MySpace to television and back out to countless digital wireless devices -- including cell phones, PDAs and PlayStation 3 -- then News Corp. wants to keep the structure and content of this new venture as fluid and flexible as possible.

With any luck, News Corp. will be devising new ways to more cost-effectively produce content that can be adopted to multiple new-media platforms rather than simply slap an existing television show onto a Web site and hope for the best. Understanding and mining new-media behaviors and economics is the key to reaching technology-empowered consumers and advertisers, and making real money.

More than any other new- or old-media company, News Corp. demonstrates an intelligent vitality to transfer its established branded content expertise to new-media spaces where they can be the basis of entirely new products and services.

This far-reaching, proactive strategy for mining and testing the new media was broadly outlined by Fox Interactive media executives in a UBS media conference in December. A social network of a leading 70 million unique Internet users of all of News Corp.'s Web sites (55 million alone from MySpace) is the driving force behind everything News Corp. does. It has launched "24" mobisodes and other TV-based product for Fox Mobile, it is driving its newly acquired IGN Entertainment Channels, e-commerce and media players, it is driving the international expansion of MySpace, and now it is revitalizing the static broadcast platform with My Network TV -- all by deepening its entertainment, news and sports content and selling all forms of advertising against its broad digital user base.

The latest effort in this broad endeavor came with Monday's launch of News Corp.'s eclectic virtual shopping service dubbed Mobizzo, selling original grassroots content as well as its existing series mobisodes and related games, graphics and ringtones a la carte to consumers (for between $1.99-$2.99 a hit) through such carriers as Cingular and T-Mobile. The unprecedented service for a major media company is expected to quickly swell to include downloads and nifty new-media features from its news, sports and theatrical film arms.

So anyone viewing My Network TV in conventional TV terms -- trying to fit it into the definition of a new TV network -- is missing the point.

Clearly, News Corp. wisely intends to merge the interactive habits and interests of younger MySpace patrons with the content focus of My Network TV, making it an extension of the wildly popular social-networking site into the more traditional broadcast TV space. The content produced for the program service will be transmitted back out to and even repackaged for other media platforms, making My Network TV an important contributor to a much broader network than is defined in traditional terms. It is a network of integrated new and old media, dictated by consumer consumption patterns, interests and needs, and comprises countless digital broadband platforms and outlets.

To that point, News Corp. will produce telenovelas, continuing soap opera-like series with such seductive titles as "Desire" and "Secrets." There will be a reality series titled "Celebrity Love Island" (enough said). A continuing search for the next supermodel in the series "Catwalk," a quiz show, and a crime-focused news magazine titled "On Scene" are more of the "guilty pleasures"-styled content that is the program service's mantra -- with all the time-honored appeal of the gossip rags found in supermarket checkout lines. The cross-promotion of programs on My Network TV, MySpace and all other Fox new-media platforms and content is a given.

However, the real news is in how News Corp. plans to use this new content, which it says it will produce in-house at Twentieth Television according to new cost-effective guidelines. For instance, each of the telenovelas will cost about $1.3 million each week to produce five hourlong episodes.

The serialized nature of many of the programs comprising My Network TV's 13-week seasons of a nightly two-hour block for its stations that had been affiliated with UPN -- which is soon to be merged with WB Network into the CW network jointly owned by CBS Corp. and Warner Bros. -- make it ideal content for downloading paid on-demand episodes from an Internet site like MySpace or from other wireless digital platforms, from the Fox homepage to a cellular phone. The production and revenue economics of this new business model has given News Corp. president and chief operating officer Peter Chernin confidence enough to declare that the My Network TV model "can be profitable from Day 1."

On a completely different level, My Network TV comes to the rescue of independent stations who are about to be orphaned by the creation of the CW by essentially merging the smaller UPN and WB networks. Just when you think that in a world of wireless, digital media platforms, grassroots broadcasters were toast, News Corp. comes to the rescue. Why? First and foremost is that Fox is the single largest broadcaster with 35 stations, 10 of which were UPN affiliates. Those Fox-owned independent stations in such cities as Chicago, Los Angeles and New York cover 24% of the U.S., though Fox expects to eventually achieve 90% penetration, each of which can wrap their locally produced fare around My Network TV's original 52-week program block while promoting themselves as "MyTV."

For now, News Corp. is not charging or paying a fee to independent broadcasters participating in My Network TV, and it is allowing stations to sell an unusually hefty nine minutes of the 14 minutes of advertising per hour that is not sold nationally by Fox. Importantly, News Corp. retains and controls all of the online and new-media extensions of the program service and its content, which launches Sept. 5.

The bottom line on all of this is that News Corp. is chasing the younger demographics into the new-media age in a way that it can follow them wherever they go -- be it Internet Web sites and their inherent blogs and transactional advertising, to digital wireless cell phones to WiMax, 3G, and Internet2 platforms yet to unfold to the critical masses. Merrill Lynch analyst Jessica Reif Cohen has forecast that digital businesses collectively will account for 9% earnings growth and more than 20% cash flow growth for News Corp. by 2010.

If News Corp.'s wide-ranging new-media assault strategy is successful it is because the company will continue to do what it does best in content production, and fashion it every which way for interactive consumers and advertisers on every platform and outlet. That sounds like a good initial strategy for conquering new media's three-headed beast.

Diane Mermigas can be reached at dmermigas@hollywoodreporter.com.