Dealer's lounge: Making Money Off Youtube

Amid a shrinking home entertainment market, many in Hollywood have questioned whether any investment in a film library these days is a wise one. However, people close to Colony said the firm is convinced that Miramax was a largely ignored asset that will generate enough cash to repay the debt portion of the purchase within four years.

The library comes with about $300 million in revenue committed from existing deals, along with approximately $100 million in projected revenue for movies released in the last 10 years, people close to the acquisition said.

Under Lang, the new Miramax is expected to explore making a digital distribution deal with Google’s YouTube, building miramax.com as a destination site to view movies online, and launching a new cable channel devoted to its library, which includes titles such as "Shakespeare In Love" and "Chicago." The new owners will also seek a new distributor for Miramax's DVDs, a service that will continue to be handled by Disney for the next several months.

The new Miramax will have between 60 and 80 employees and about $15 million in annual overhead spending, said people with knowledge of the plans. Though executives will explore rights deals and partnerships for sequels and spinoffs based on its library, Miramax won’t finance the production of new films for at least a year, those people said.

A key figure in the Miramax negotiations was Nanula, a longtime senior executive at Disney who served as chief financial officer when the company acquired the specialty studio in 1993 from the Weinsteins.

When his boss, Barrack, gave him a green light to pursue entertainment acquisitions in late June, Nanula suggested they look at Miramax. Barrack contacted Tutor, who was already in talks with Disney to buy Miramax after a previous deal with Burkle and the Weinstein brothers collapsed.

As he had longstanding relationships with several Disney executives, including its lead negotiator, Executive Vice President of Corporate Strategy Kevin Mayer, Nanula spearheaded the talks beginning in early July. He and fellow Colony principal Justin Chang helped to shape the deal that Colony, Tutor and Disney agreed to in principle on July 23.

In the ensuing four months, many details of the purchase were reshaped, as investors originally brought in by Tutor, including Morgan Creek Productions Chief Executive James Robinson, were replaced by parties associated with Colony, most notably the Qatar fund.

Colony and Tutor plan to begin assembling their executive team in the coming weeks. Along with Lang, who has extensive experience in digital media, they are expected to hire a senior television distribution executive to sell Miramax movies to cable and broadcast networks around the world. At one point, talks were underway with Metro-Goldwyn-Mayer TV executive Jim Packer, but the two sides didn't reach an agreement.

-- Ben Fritz

Related:

Ron Tutor-led group closes Miramax deal

New Miramax closing in on CEO, other executives

Disney agrees to sell Miramax to investor group led by Ron Tutor

Top photo: Thomas J. Barrack. Bottom photo: Richard Nanula. Credit: Colony Capital.

After a week of on-and-off rumors about Google making an offer for Groupon, there are now multiple reports that the web giant is close to paying as much as $6 billion for the social-shopping service, which has been growing faster than just about any tech-related company in recent memory — including Google. If true, the deal would be almost twice the size of the search company’s largest acquisition ever (the $3.1-billion purchase of DoubleClick in 2007), and would be a gigantic bet on two trends that Google has so far failed to really take advantage of: namely, the movement of local advertising onto the web, and the rise of social behavior online.

Google’s $1.65-billion acquisition of YouTube in 2006 makes a good comparison for its apparent interest in Groupon: At the time, online video — and just as important, the sharing and embedding of that video — was clearly the future of the web, but Google was a tiny player in that market and wanted to get big quickly. So it paid what seemed like a massive amount of money at the time for the startup, and has spent the past few years trying to figure out how to monetize that content.

The nice part about Groupon is, while YouTube was located more towards the social end of the spectrum and less the monetization end, the group-buying service is a monetization machine — although one that is also socially oriented, since it takes advantage of consumers’ desire to trigger discounts by forming a group. Clearly one of the big attractions for any acquirer is the fact that Groupon is bringing in an estimated $50 million in revenue a month, and expects to close the year with more than half a billion dollars in sales. That’s after less than two years in existence.

Why has Groupon been able to grow so quickly? As I outline in my latest GigaOM Pro report (subscription required), the startup’s rapid success is a sign of how explosive the power of social media can be when applied to a revenue-generating idea like coupons. As co-founder and angel investor Eric Lefkofsky described in a recent interview about Groupon, the company (which was originally called The Point, and focused on connecting people around social issues and activism) didn’t really take off as a business until it married the viral nature of a group-buying offer with the desire by local retailers to reach out to potential customers. Email is the company’s primary method, but it’s also fueled by social networks like Twitter and Facebook.

More than anything, Groupon has been riding the social-advertising wave, which is something Google desperately wants to own. In many ways, it’s the next step beyond AdWords and AdSense: While those products involve advertising keywords that sit next to searches and capture surfers who are looking for information about specific topics, Groupon reaches out to people who may not even know they want the item yet. The company’s DoubleClick acquisition gave it control of banner advertising, but banners are the past; social advertising is the future. As Macquarie Research analyst Ben Schachter said in a research note this morning, the purchase “is about much more than Google generating revenue from emailed coupons — it’s about Google’s ability to potentially access and utilize the social graph for eCommerce.”

The other important aspect of the deal is that it is primarily focused on local or regional businesses. Groupon has also started promoting national deals of the kind it did with The Gap, but the company’s real power is in helping small and medium-sized retailers, restaurants and other merchants connect with customers directly, and boost demand for their services and products. That’s a market Google hasn’t been able to really capitalize on, despite attempts to do so through its Places feature. That was the rationale behind the web giant’s reported interest in buying Yelp — a deal which didn’t go forward, for unknown reasons — and it is driving its interest in Groupon as well.

What would web advertising look like if Google were to acquire Groupon? Instead of just keyword ads targeted to what you searched for, you could start to see offers directed specifically at your location, or based on things you have searched for in Google Places, or places you have checked in at through Google Latitude, or services you have rated via the web giant’s new and somewhat underwhelming Hotpot recommendation service. Google’s knowledge of algorithms could provide better matching and sorting of those deals, and the search company could also use the knowledge that it gains from Groupon’s millions of users and advertisers to fine-tune some of its other locally focused services.

In a recent interview, Don Rainey of Grotech Ventures — an investor in Groupon’s largest competitor, LivingSocial — talked about a future in which consumers and local businesses could participate in a kind of real-time auction-style marketplace for deals on products and services, so people looking for deals on dinner tonight could survey the offers from local restaurants and pick the ones they wanted, and merchants could fine-tune their offers based on real-time demand. That is one future that Google desperately wants to be part of, and $6 billion probably seems like a small price to pay for a seat at that table. For more on Groupon, please see my GigaOM Pro report.

Related GigaOM Pro content (sub req’d):

Why Google Should Fear the Social Web

Lessons From Twitter: How to Play Nice With Ecosystem Partners

What We Can Learn From the Guardian’s Open Platform

Post and thumbnail photos courtesy of Flickr users Groupon and TechCrunch

bench craft company scam

Dealer's lounge

Tuesday, December 28, 2010

Making Money Off Youtube

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

<b>News</b> - Reese Witherspoon, Jim Toth Engaged! - Healthy Lifestyle <b>...</b>

Fox <b>News</b> - Ratings - 2010 | MSNBC - CNN | Mediaite

'NBC Nightly <b>News</b>' Wins 4th Quarter Ratings

No comments:

Post a Comment