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Are These People Really Worth $200 Million?

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Nisenholtz: Breaking news is really a commodity. It's provided principally by news wires. It doesn't take much analysis or depth of thinking. It's breaking news. I think what people pay for among the old media, to put it that way, are the considered thoughts and editing capabilities of people who spend their lives doing this.

Wolff: Let's step back. At what point does new media have to be at least as profitable and efficient as old media?

Suh: Day one.

Wolff: Okay, but that's clearly not true . . . laughter

Paternot: Measured by investor return?

Judson: The question comes down to, can you create a sticky community? I mean a loyal audience, the kind of audience loyalty that you get in old media. The answer is no.

Kurnit: No, I will not accept that --

Judson: I knew you wouldn't.

Kurnit: I grew up in television, which is why I'm comfortable that a medium that attracts users can charge advertisers, and as long as you have the balance of cost versus revenue in place, you're fine.

Paternot: If you're able to aggregate a huge audience, then your cost structure can be lower than broadcast. On the Internet, your cost of transmission can be virtually zero.

Judson: It seems to me that we have not yet seen any of the major television studios say, "Internet media is definitely the future." What they have done is bought in, in an inexpensive way, using airtime and other kinds of things. So that while you read a lot about their affiliations with new-media ventures, no one has stepped up and said, "This is so much the future that, like AT&T, I have to buy TCI."

Kurnit: First we have to say, how valuable is the Internet in its way of changing communications and commerce as dramatically as the printing press and computing and television did? If we believe that it is a dramatic change, then the metrics of looking at old-media companies don't make sense.

Wolff: Let me also ask a question in the other way -- not about old-media companies judging new-media companies but new-media companies using the incredible values of their share prices to buy old-media companies. Last fall, I suggested in my New York column that CBS was a likely acquisition for AOL. This is now the rumor du jour. Could it happen? Should it happen?

Nisenholtz: It would be a drop in the bucket for AOL, too, which is so extraordinary. But I think the competencies and the whole range of services offered in the Internet space are not necessarily, to use an overused word, synergistic with a broadcast network.

Suh: It really depends on whether you're building a portfolio or building a company.

Nisenholtz: Broadcast networks, with all due respect to television, sell mass undifferentiated eyeballs for the most part, and I think on the Internet we're trending toward targeted one-to-one media.

Wolff: But AOL would certainly insist that it is a media organization. Media is trending toward package. What's the package that I can sell? If I can only sell online, it's going to be difficult for me to compete with ad-sales organizations like Time Warner, for instance.

Paternot: Your ability to reach someone is far greater if you're working on both sides, the Internet and the broadcast side. And who is to say that four or five years down the road, 5 percent of the population or 10 percent of the population now has HDTVs, and through their cable lines they're no longer just getting dumb broadcast images, but they are digitally transmitted. It's on that very same line that someone could take out a 30-second ad, and instead of putting in a dumb ad, it's now a 30-second ad targeted to young men in their mid-twenties. Or something even more specific, one-on-one to me.

Nisenholtz: Well, hold on. I wasn't suggesting at all that there isn't commonality between Internet companies and video. What I was saying is that the commonality between an Internet company and a traditional mass-market broadcaster is a difficult one for me. I know a lot of the people who work in those companies. I've worked with them for twenty years. And I've got to tell you, if you combine with CBS, you will have two separate operations! Laughter


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