Deals: Venture Money and M&A Activity in the Sports Media Sector
Jim Bankoff; Chairman. SB Nation
Chris Russo; Fantasy Sports Ventures
Jeff Price; President Sports Illustrated Digital
Josh Swartz; COO, Wasserman Media Group

On Sports Deals in the Current Economy:
Jim Bankoff:
On a macro level everyone is suffering, you can’t pretend otherwise. Having said that…small companies, good companies will do well, will build value. Larger companies as well will have an opportunity to focus on their core value and to grow. As newspaper chains can’t focus on local stories, that gives us an opportunity to come in and be the biggest sites for these communities.

Chris Russo
The web 2.0 exuberance bubble has burst. The key now does come down to having an ability to engage users and over the next 24-36 months you have to build revenue and cash flow, you’ve got to bring me the revenue story, the engaged userbase, and how you’re going to scale. We cannot have this exuberance, it has to be built on fundamentals. Have to focus on being lean, mean and ultimately profitable.

Jeff Price
I don’t think we’ll see another 100 million Rivals.com or CSTV deal. Do I think there are big deals? yes, sure. I think there could be big deals depending on how they grow over the next 18 months. But I think what has to happen over the next 18 months is some consolidation of companies that can’t be profitable on their own or else they won’t exist anymore.

Josh Swartz
It’s still early but in this case we’re seeing equal constriction on both sides of the market. I look at this economic macro climate as a big opportunity especially for small companies that can go in the right direction, the days of basing business on cost per unique are gone, if you can’t monetize your userbase I’m not going to look at you.

On Business Models for Sports Content
Chris Russo
Advertising, ultimately is the foundation of the sports vertical. Bob [Bowman] obviously has built a business based on video. Building a business based on content from the subscription side is a much more difficult proposition. Things like merchandising have become a much larger part of what we do in sports. Video lives with the leagues for the most part.

Josh Swartz
The more niche your content is the greater the ability to charge for them because the userbase is so rabid, and that’s information you can’t find anywhere else, certainly not for free.

On Overall Content Strategy:
I think all the leagues are doing a good job optimizing their content. We do 15 games a day, we play all the time our content is fundamentally different than all other games. Baseball, our job is to promote the game all day whereever it is. Three TV parntners ESPN Turner and FOX, what we try and do is recognize what works for us works for us but also understand what works for [TV partners] and try to accommodate it.

On Digital Rights Agreements:
In 2001 it was sort of we don’t know what it is People are smarter today in terms of knowing what it is to have a digital contract, in 5 years people are going to get more comfortable about simulcasting…an eyeball online is arguably more valuable than an eyeball on TV.

On Free vs. Paid Content
Increasingly I think folks are going to realize that the ad market is not a bottomless pit…I think you’re going to see more and more people charging for content, doing what cable does which is charging for subscriptions and having ads. 95% of our content is ad free but I don’t think you want to be in business always ad supported

On Mobile:
Mobile About 15% the usage is exploding, during the season we’ll do about 12-15 million page views on Mobile. Apple and RIM have been very smart…in terms of usage reliability, I guarantee while we’ve been sitting up here everyone has checked their blackberry it may not be a major part of our business but we have to be there and there’s no choice.

They certainly want information whether it’s the gambler or the avid fan, they want real-time information. The Apple application they like, people want video but the screen size needs to be bigger, [for video] the iPhone is the first device that works for us.

On Measurement
We’re big fans of getting it right, since you can get it right you should. The notion that you can hire a panel and get them to be honest about what they do at work…it’s pure poppycock. That’s why we have a boss button. We all have logs, everybody has logs, we hope that some day everyone will look at the log files and say that’s what it is.

Nobody’s going to tell the truth about what they actually do. I don’t know anybody that thinks that panels work. People should be auditing these log files, most everybody who’s large looks at Omniture. [Nielsen numbers are ] off by a factor of 10. When we get paid they care about impressions so they look at our log files, the only time it matters is when our reach is 58 million, and Nielsen is saying it’s 12 million.

On the Current Players Association Contract
Players Associate has been a good partner, we would anticipate restructuring our deal and getting it more in line with the way the world works. They’ve been great partners of ours and we’re continuing to work with them.

On MLB Network:
We’ve never been able to partner with a cable network, we have partners now we’ll be able to have both, we’ll be able to go out and do ad sales and it will be great for the fan first of all and it will be good for MLB.com.

On Licensing Philosophy
The pricing reflects two things to us today. The first thing is the business value, there is a value there, we’re all moving a little bit at a time so we don’t want to make a big deal that turns out to be a chump deal…if a deal doesn’t happen we still own the rights and we can still do it next year. We’re all trying to figure out how to move beyond the shores of our portal… you’re seeing a loosening up. In the ESPN deal, we gave them a lot more content than we did before that, I think you’ll see a lot more leagues do more of that.

On Subscription Products
We charge for live games. Most of our site has to be free not because a fan could go to ESPN, we hope to get to the point where we have some games that are totally ad supported and we hope to get to that in 2009.

On YouTube / UGC / Slingbox
[Some fans] are routinely stealing our highlights or republishing live games, it really has to be systematic, repeated for us to force them to take it down, we don’t think that it’s hurting our business model to allow some of that to occur [for related non-highlight / non-game content]. May see more opening up in 2009.

Slingbox encourages fans to utilize content in a way they shouldn’t use it. We’re not excited about it. Having said that, what do you do, we’re going to stand outside the door of fans that have bought a slingbox and ask them to pay a fee? You can’t do that, the way to win is you win it on technology, we’ve got things like pitchtracker, you win it on the loyalty of the fans.

As traditional business models for publishers are disrupted by new media, where should media turn?

“We’ve seen from the year 2000 where print represented 48% of member revenue on average that has dropped to 38%” said Gordon Hughes, President & CEO of American Business Media. “And what we’ve seen is tremendous growth in tradeshows and events, and of course the internet has had the greatest growth.”

“Moving to new business models. 85% of our members are still in that spot where they’re working with advertising as their primary revenue source and 50% or more are beginning that migration.
Streaming media has become a new robust revenue stream, whether it’s 7 or 12 second rollups agencies are starting to like this. A number of our members are doing this and I love the idea of two revenue models, subscription and ad sales.”

Elisabeth Sami CNBC’s SVP Global Business Development added some metrics on the company’s pursuit of dual revenue models online, saying CNBC has nearly 200,000 users across its enterprise and direct to consumer subscription products while the company is generating solid revenue through ads on CNBC.com. She said the company feels well positioned to effectively reach a large affluent audience and continues to see growth in nascent areas like mobile and satellite radio.

As mainstream media competes for eyeballs against bloggers and others in the new media environment, what is the role of Business Media in the current financial situation?

Larry Kramer moderated a panel at FOBM featuring an anchor, managing editor and editorial writer to get a look at how covering business is changing. The key takeaway, the pressure to be right and first is putting more stress on business media organizations now than ever before.

Liz Claman; Anchor, Fox Business Network
[The current financial crisis] is the most drawn out breaking story… rumor driven and if you go with every rumor you’re going to gyrate the markets but it’s a journalist’s dream to cover this. “Everyone loves a bubble until it busts and then it spews toxic waste all over the place, and then it’s our fault…classic blame the messenger” “As my father used to say, the only difference between salad and garbage is timing… You’ve got to talk about where the soccer ball is going to go, not where it is right now, you have to present the different echelons of possibility.”

I’m impressed with the intelligence of the comments and our viewers. There’s a blog called Dealbreaker, they get a lot of tips, but if you don’t double and triple check them you lose all credibility. I look at some of the things that get thrown out there, and maybe 78% are right on but what about that other percentage?

Chrystia Freeland; Managing Editor, Financial Times
Anyone working in a print based organization has these dual roles, we’re constantly thinking about the website, but we’re also worried about what’s going to be on the front page tomorrow. And we also have 7 different world editions. As, reporters we are reconciling ourselves that we are not Olympian godlike figures, and what I mean by that is that there is a great temptation to get ahead of the curve, to tell you what tomorrow’s story will be…I don’t think that anyone has a firm grasp on what’s going on. Fly as close to the ground as we can, reconstruct as best we can what actually happened, also, to forecast what the real drivers will be, a little bit of a judgment but to stick to the facts.

You could absolutely understand that there was a bubble but while the music is playing you have to keep on dancing, you know the music is going to stop, and you don’t want to be the guy without a chair but you want to be the guy with the last chair because people are making lots of money.

We focus much more on being right than ever before because that is our competitive advantage.

Joe Nocera; Columnist, New York Times
I wouldn’t want to have to be the person who says the market just dropped 400 points and let me try to explain it for you, that’s a fools errand. I think one of the real value adds of the New York Times is we have a weekly column …the notion that you can bring content and perspective, every Saturday. My job is to try to help you understand what’s going on, from my perspective. We can do a big long story offering perspective and context, it’s the most important thing we can do, I think people really hunger for that and that’s what I’m doing.

We’re acting the same way in this financial crisis as people did in 1929 and before, people don’t change, the next step is the search for villains.

At the Future of Business Media Conference, Sarah Fay, CEO of Aegis Media just wrapped up a discussion with Fortune Managing Editor Andy Serwer. The Q&A included some interesting thoughts on where we are in media right now and the future of new technologies in the media industry. Key points:

On the current economic situation:
I think there is an anticipation of it getting worse. We’re reaching a critical point… the predictions are coming down slightly but the bottom is not falling out of the media. There’s a shift to digital media… [where] spending is still up fairly significantly.

What’s your Google strategy?:
Google is a huge partner of ours in search…we actually work with Google collaboratively to get sites high in their rankings, we work with Google TV. We believe that YouTube is a force to be reconnected with…when it comes to search they are it for sure. Search is really important, will continue to grow for the next decade. Google TV is interesting but we’re seeing that there are a number of companies going after that model, right now there isn’t a large enough footprint, but you can add efficiency so it’s a really good place to get your feet wet.

On the Yahoo/Google transaction
“I’m not a big fan” I actually was a big fan of Microsoft buying Yahoo, I thought those two would give Google a run for its money, I like competition. The idea of the biggest search player and the second biggest search player getting together to join forces doesn’t sound so good to me.

On TV Advertising:
Areas of TV that are softening up is primarily the long tail, cable, we have not seen network come down in demand or maybe just a little bit. But we are seeing the same dynamic year after year with the networks, that is declining ratings but increasing CPMs because it’s prestige pricing, beachfront property…There is a whole long tail of TV that is very soft and has been soft on a regular basis and we are seeing technologies like GoogleTV like Project Canoe, and I think that we’re going to get to a point where we get a little more comfortable buying the digital aspect of TV and there’s a lot more efficiency than there was before.

On Hulu:
Hulu fits in to a buy from a broadband standpoint, it’s pretty regularly a part of every schedule, it’s different from TV; It’s bought differently, it’s measured differently, but we’re very bullish. We like that you can’t skip the advertising, can get very targeted, and it creates a very high impact relative to other media.

On declining programming budgets:
Certainly the networks are happy about the popularity of reality TV because it cost less… We also may see an increase in quality and more content going to the HBO model. There’s a willingness to pay great money for good content.

On user-generated & viral advertising:
Viral is huge, we’re looking to incorporate communities and the voice of the consumer in almost everything we do. Getting consumers involved in campaigns, getting consumers to create for you or participate with the brand is where you will get an extension to the media budget. If you can get the consumer talking for your brand there’s a new kind of authenticity and creativity that comes along with that, and a lasting impact on brand equity.

We understand you can’t be in three places at once, that’s what we’re here for. Tuesday morning while Corey’s at DPAC II and I’m at FOBM, Beet.TV will be streaming live from 30 Rock as Erick Schonfeld of TechCrunch and Dan Farber of CNET moderate an online video summit with an impressive panel of industry leaders.

The live stream is embedded below:

Digital content firm DECA has launched Down To Business, a new business show hosted by Pat Croce former Philadelphia 76ers trainer turned owner and best-selling author. Already Croce has lined up some pretty high profile guests, and his personality and direct interview style make the show pretty entertaining.

The twice weekly series will be distributed exclusively by Portfolio which will control also ad sales. The Portfolio site uses a Brightcove player which unfortunately has disabled embedding which should limit some of the series viral potential, so you’ll have to head over there to check it out. But Portfolio is betting people will go to where the content is, and I for one, will.

The Metropolitan Opera, through PermissionTV, is now offering Met Player, a new online subscription streaming service that continues to expand the Met’s use of digital media.

The Met Player will offer subscribers access to 170 full-length performances—including 13 operas shot in high-definition video, 37 standard-definition videos, and 120 historic audio recordings. Selections from the Met’s video and audio archives will be available to opera-lovers everywhere and at any time. Perfect for the audiophile and videophile crowd that classical fans tend to be (see DVD-A and SACD demographics).

In addition to online viewing, users can extend their Met Player experience by connecting their computers to HD TV sets and home-stereo sound systems. PermissionTV and the Met are leveraging Move Network’s technology to power the player.

30 Rock is back. It’s not premiering on TV for another week, but NBC is making it available ahead of time tonight on Hulu. Considering the show has had weak ratings but great reviews in its first two seasons, this is a low-risk bet to generate buzz and hopefully boost viewership when it airs on NBC next Thursday.

Above: 30 Rock Season 3 Premiere on Hulu on OVW

Swarmcast, provider of multi-source video streaming which powers MLB.TV, TV Tokyo and a number of other online video sites announced today a new turnkey offering geared specifically toward delivering video for live sports.

Swarmcast for Sports offers media rights holders an end-to-end solution including acquisition, DRM, content delivery, comprehensive reporting and an open platform enabling codec-agnostic delivery. The offering brings the company into greater competition with Move Networks which delivers video for ESPN360 and recently made an announcement highlighting their recent success in delivering live video.

“Swarmcast For Sports fills a massive need in the industry by providing the technology and infrastructure to capture sports on the playing field, package that content with a variety of monetization tools and then seamlessly deliver to any broadband connected device” said Kelly C. Egan, SVP of Business Development for Swarmcast.

The major advantage of Swarmcast’s offering, like that of Move Networks is that the client-side protocol - a downloadable plugin enables the company to improve viewer experience for all users regardless of connection speed while at the same time using that network information to improve stability, do rights management, and get incredibly granular data on viewing and user interaction which needless to say is immensely valuable in advertising.

Unlike Move Networks which offers only a high end all-inclusive solution, costing hundreds of thousands of dollars or more in most cases, Swarmcast offers broadcasters the flexibility to use their system to take advantage of any aspect of the value chain. By mixing and matching depending on their specific needs, the open platform offers a turnkey solution if desired. But it also allows media companies the flexibility to adapt to the fast changing digital media environment while minimizing switching costs.