Big media seeks new Web blood

Fox Interactive's Ross Levinsohn and AOL's Jonathan Miller both stepped down this week. What's behind the shake-ups at big media's digital businesses?

By Paul R. La Monica, editor at large

NEW YORK ( -- With apologies to the Buggles: it looks like video killed the dot-com media star.

In the past few weeks, media giants News Corp., Time Warner, Viacom and CBS have announced executive shake-ups at their digital media businesses. And in almost each case, the new hire is someone with significant experience in the world of TV or online video.

The acquisition of YouTube by Google has big media companies scrambling to figure out their online video strategies, analysts say.

On Thursday, News Corp. (Charts) announced that Ross Levinsohn, the president of Fox Interactive Media and the man generally credited for News Corp.'s decision to buy the popular social networking site MySpace, was leaving the company.

Ross Levinsohn is being replaced by Peter Levinsohn (the two are cousins), who is currently the head of Fox Entertainment's digital media business. He has been in charge of negotiations with Apple (Charts), (Charts) and other online media stores regarding digital distribution of Fox TV shows and movies.

Earlier this week, Time Warner (Charts) announced that it had hired Randy Falco, formerly the president and chief operating officer with GE's (Charts) NBC Universal Television Group, to run its AOL division, replacing the embattled Jonathan Miller. (Time Warner also owns

Although Wall Street has applauded AOL's new strategy to make much of its services free to users, many still believe that AOL needs to focus even more on its growing online video business to attract more users and advertisers.

Viacom (Charts) tapped a digital video veteran to run its online media operations. Mika Salmi, formerly the CEO of Atom Entertainment, which Viacom agreed to buy in August, was named president of global digital media for MTV Networks, the Viacom subsidiary that includes MTV, Nickelodeon and other Viacom-owned cable networks, earlier this month.

Despite its acquisitions of Atom and iFilm, another online video site, Viacom has been criticized by some for being too slow to adapt to the digital media world.

Finally, one other big media firm recently announced an executive change in its online ranks: CBS (Charts).

But instead of hiring a seasoned TV or online video executive, it replaced long-time digital chief Larry Kramer this month with Quincy Smith, formerly an executive with Allen & Co., an investment bank focusing on the media industry.

Still, even though Smith does not have a specific background in TV or online video, his deal-making savvy could be a sign that CBS, which currently operates its own online video site called Innertube, may be looking to make more significant acquisitions.

Of all these moves, the only major surprise is Ross Levinsohn's departure. MySpace has seen its popularity and profit potential increase over the past year to the point where News Corp. CEO Rupert Murdoch told investors at a meeting in Australia earlier this week that MySpace could be sold for $6 billion.

News Corp. bought MySpace parent company Intermix Media last year for $580 million.

But the online video pecking order drastically changed in October when search engine leader Google (Charts) announced it was buying the most popular online video site YouTube. And that, it appears, has necessitated some of the recent moves.

One analyst said that for News Corp., for example, the big challenge now is not necessarily a need to buy more online media firms but to better integrate what they already own.

"News Corp. has a ton of good online assets but they don't seem to be well intertwined just yet. They don't really have a national presence in terms of a broadband video strategy," said Josh Martin, an analyst with tech research firm Yankee Group.

David Joyce, an analyst with Miller Tabak + Co., adds that the recent series of executive changes at big media's online operations show that media firms are serious about making money from online video through their own Web sites instead of having to rely on partnerships.

"Video is obviously the big new wave," said Joyce. "Media companies know there is a demand for programming and they want to try and monetize it on their own sites as well."

To that end, Joyce said Time Warner's decision to hire Falco could work out well for AOL since the company clearly needed someone with more experience dealing with advertisers. Falco was a more than thirty-year veteran at NBC.

In addition, AOL has been focusing more on video as of late; the company set up the free streaming video site In2Tv earlier this year and has also made several acquisitions of online video startups this year, including Truveo and Lightningcast.

Joyce added that CBS, which launched a highly successful free online broadcast of the popular NCAA men's college basketball tournament this past March, is also positioned to cash in on increased online video advertising demand.

And he thinks Viacom could do a better job of attracting ad revenue for some of its programs as well, most notably shows on its Comedy Central network, which often wound up being posted on YouTube until Viacom asked YouTube earlier this month to remove pirated clips from its site due to copyright concerns.

But another analyst said that the shake-ups at big media companies shouldn't necessarily be seen as a shot across the bow against Google.

"They're wary of Google but they are all in bed with Google as well," said Joe Bonner, an analyst with Argus Research. "I think the attitude of big media is 'Let's get Google on our side.'"

As such, Google owns a 5 percent stake in AOL, has an online video ad partnership with Viacom, sells CBS TV shows on Google Video and is also the exclusive provider of search results on MySpace.

Bonner said that the executive changes are merely a reflection that media companies need to find a way to transplant the advertising-based business model that has worked for them with television to the Web.

"Digital is where these companies are going. That's what they see as their future," he said. "It's simply following the money. It appears that more advertising dollars are going from broadcast to online."

Analysts quoted in this story do not own shares of the companies mentioned and their firms have no investment banking ties with the companies.

The reporter of this story owns shares of Time Warner through his company's 401(k) plan. Top of page

Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?