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March 28, 2024

Big Is Better, Chapter 144

Have no doubt that in this web age, big is better. Ideas are great, but capital means the ability to acquire, to build and to sustain a business through harder times. The recent reminders:

  • Salon on the Block: Too many years of too many losses, moderate changes in strategy, and a future that looks less than glowing for membership or subscription revenue, or rate-challenged web advertising, and you have the Salon case history. Salon is a 1.0 online-only news model, and though CEO Richard Gingras has been applying smarts to the operation, it is now looking for salvation to a bigger media brother to provide shelter.
  • The Comcast/Level 3 Battle: Lots of net neutrality, Netflix-as-the-current-leading-edge-of-the-digital revolution overtones here, but look for Comcast to emerge eventually and — get paid. It’s been the companies with massive cash flow, Comcast, ATT and Verizon that have survived and prospered despite numerous strategic miscues. Capital is forgiving.
  • News Corp: It’s highly diversified, $33 billion (sales) News Corp that can turn out “The Daily” as a test, spending $30 million — and not have it be a life-or-death venture. That’s about a third of the profit that the Fox TV business churns out each quarter. Or it can put up an ill-conceived wall at the Times of London, and take it in stride. Or invest in various industry consortia. Compare that to the anguished investment decisions of almost all other news companies these days.
  • Google: With a $7 billion quarterly revenue run rate, it can afford to double the price that Yahoo offered for Groupon earlier this year. And that’s on top of 40 acquisitions it has already made this year. ‘Nough said.

Lots of implications here, but here’s one: all the online-only companies, non-profit or profit-seeking, better be thinking about how they are going play, where they are going to fit, with the big guys. That’s the world we all live in.

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