Archive for December, 2008

Digital Media VC

Posted in Deals, Digital Media, News with tags , , , on December 26, 2008 by Dave Liu

Ferrell-Backed Comedy Site Raises $3 Million — FunnyOrDie, the company with a network of online content site and backed by Will Ferrell and Sequoia Capital, has raised a new round of $3 million from one undisclosed investor, according to an SEC filing. No word on whether this is a new tranche, or part of the $15 million it raised earlier this year.

Digital Media M&A

Posted in Deals, Digital Media, News with tags , , , , , , , , on December 26, 2008 by Dave Liu

Chinese Portal Company SINA Buys Part of Focus Media For About $1B in Stock — A rare large media deal, this time in the Chinese market: SINA, one of the big online portal companies in China, has acquired the out-of-home ad assets to local company Focus Media (NSDQ: FMCN), in stock. It will acquire Focus’ LCD display network, poster frame network and in-store network; in return, SINA will issue 47 million newly issued ordinary shares to Focus, who will then distribute these shares to its shareholders shortly after the closing. Focus will retain its online ad division, the movie theater ad network portion of its commercial location network and certain traditional billboards.

Austin Ventures and Casella Buy Fin Info Provider Asset International — Austin Ventures, the PE firm, has acquired B2B online/print financial information provider Asset International, a Stamford, CT, which focuses on pension funds, asset managers, and other financial institutions. AV has also invested an undisclosed amount of capital into the company. Jim Casella, the former CEO of Reed Business U.S., who was working with Austin as an entrepreneur in residence of sorts, has taken over at the CEO of the decade old company. Asset International has brands such as Plamsponsor magazine aimed at inv*stm*nt professionals, Daily NewsDash and AdvisorDash newsletters, among others. Casella has been working with Austin Ventures for more than a year now, and had been working with one of the parties involved in the failed RBI auction which was finally called off last month. Also, he was supposedly part of the consortium that almost bought Entrepreneur magazine earlier this year.

PixelFish Buys Assets Of Shuttered Video Apps Firm Eyespot — PixelFish, an LA-based online video advertising solutions firm, has bought the assets of shuttered online video tools and services provider Eyespot, for an undisclosed sum. Eyespot closed down earlier this Fall, after failing to gain traction in the industry, despite having raised $3.7 million from Gabriel Venture Partners, Express Ventures and executives from and DivX. Now with the assets acquisition, PixelFish will integrate EyeSpot’s online video production tools and video transcoding tech into its video ad creation and optimization tech.

Articles of the Week

Posted in Digital Media, News with tags , , , , , , , , , , , , , , , , , , on December 26, 2008 by Dave Liu

YouTube’s Plan To Gain The Upper Hand With Music Labels — Record labels like Universal Music Group are using YouTube to rake in millions of dollars from their music videos, and yesterday we raised the question of whether Google was making much money from these deals. Well, sources tell MediaMemo’s Peter Kafka that the answer is a big, fat no. In fact, the music clips are costing Google (NSDQ: GOOG) money, even though YouTube is running ads on them. But that is about to change, Kafka says. Currently, YouTube pays the labels either a per-stream fee or a portion of the ad revenue (if there’s an ad on the video) every time a user clicks on one of their music clips; but since YouTube hasn’t saturated the site with ads (yet), most of the time it’s stuck with the per-stream fee. YouTube is in the midst of negotiating new deals with the labels (UMG, EMI, Sony (NYSE: SNE) and Warner Music Group) on very different terms, and Kafka’s sources say the new terms will not add nearly as much cash to the labels’ coffers. The current deals expire over the course of 2009.  

Newspapers Suddenly Adapt To Social Media; Nearly 60 Percent Offer User-Gen Content — Newspapers’ tough times appear to have spurred the industry to adopt the kind of social media habits that have led so many readers away from the traditional news format. In The Bivings Group’s annual look at how newspapers use the internet, the researcher found that 58 percent of dailies offered some form of user-generated content this past year. That’s more than double the 24 percent of papers that had user-gen features in 2007. Other finding’s from Bivings’ report (PDF): The number of papers who opened up stories to user comments also more than doubled in the last year to 75 percent in 2007 versus just 33 percent the year before.

Facebook Continues Torrid Growth — Facebook is growing faster than ever, especially overseas. Active users on the social network have hit 140 million, according to new data released by the company this week. That total is up from the 130 million Facebook reached earlier this month, putting its current growth rate at more than 600,000 users a day, by the estimation of Inside Facebook blogger Justin Smith. It crossed 100 million users in August. Most of that growth–about 70%–continues to be outside the U.S. Inside Facebook pointed out that growth has been especially explosive in Italy, where users have jumped from 572,000 in July to 4.9 million now.  

Warner Pulls Videos From YouTube As Contract Talks Break Down — In another setback for Google’s popular video sharing site, Warner Music Group over the weekend ordered YouTube to remove all music videos by its artists after contractual negotiations broke down. According to Reuters, Warner’s decision could affect hundreds of thousands of video clips. Talks broke down early Saturday because Warner wanted a bigger share of ad revenues. “We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide,” Warner said in a statement. According to comScore, YouTube had more than 100 million viewers in the U.S. in October, making it the most popular destination for online video by a massive margin. Warner became the first major media company to negotiate a deal with YouTube in 2006. As part of that deal, Warner, Universal Music Group and Sony Music each took small stakes in the online video giant prior to Google’s acquisition in 2006, profiting from its close.

NeoEdge Takes On comScore — NeoEdge Networks will announce today a service to collect survey data to support some of the advertising technologies and online games it develops and supports. The NeoEdge survey, dubbed “NeoMom,” takes on comScore and focuses on females ages 25 and 54. The survey topics are geared toward consumer products. Gathering survey data for the first report begins in January.  

Redstone Gets Reprieve To Restructure $800 Million In Debt — No financial Armageddon today for Sumner Redstone, who gets an indefinite reprieve on either paying—not gonna happen—or restructuring some $800 million in debt coming due for National Amusements. The total debt is about $1.6 billion. Redstone owns 80 percent of the company, which owns movie theaters and controls Viacom (NYSE: VIA) and CBS (NYSE: CBS). (Redstone is chairman of both media company boards.) The reason for the extension: National Amusements is gaining time to finesse a plan that’s already been presented to creditors, it’s current on payments and the deadline was more of a target than anything.  

Study: Almost 10% On Social Networks Via Mobile — The proportion of U.S. mobile subscribers who access social networks on their cell phones nearly tripled to almost 10% over a year ago, according to a consumer study by The Kelsey Group and ConStat spotlighted Monday by eMarketer. Specifically, 9.6% of mobile users were connecting to a social network as of October 2008, compared to 3.4% in September 2007. The rapid growth is due in part to the small base of people who are social networking on mobile. 

Fanscape Projects 15% Revenue Increase In ’09 — At best, next year represents uncertainty for most advertising and agencies. Social-centric media shops, however, continue to wax optimistic over their prospects for growth. Take Los Angeles-based Fanscape, a digital-engagement marketing agency that works with clients to better understand and influence niche audiences online. “The jury’s still out, but I believe that revenue is going to grow by 15% next year,” said Terry Dry, president and co-founder of Fanscape. 

Warner Overplays YouTube Hand — CNet’s Greg Sandoval claims that it was YouTube that actually began removing Warner Music Group’s videos from its site after Warner came to Google with an “11th-hour demand” for better financial terms. Warner over the weekend said that it began asking that YouTube remove its videos after talks to renegotiate its licensing deal broke down, but two sources close to the situation claim that YouTube actually walked away from the deal first. According to the sources, managers at YouTube considered Warner’s demand, only to begin pulling Warner music videos as its answer. YouTube also first notified the public of the split by posting a note on its blog. Warner responded by saying the music labels were building a YouTube competitor, and that YouTube didn’t drive much revenue for them, anyway, and that Warner’s departure was a bad sign for the Google video site.

Friendfinder Networks files to go public, may make acquisitions — Friendfinder Networks, the Boca Raton, Florida-based social networking company, has filed for an initial public offering and anticipates USD 460m in proceeds. The Internet-based company said in an S-1 filing on 23 December 2008 with the US Securities and Exchange Commission that Renaissance Capital is the underwriter. “To access technologies and provide products that are necessary for us to remain competitive, we may make future acquisitions and investments and may enter into strategic partnerships with other companies. Such investments may require a commitment of significant capital and human and other resources,” stated the company in its SEC filing. Source: mergermarket.

WaPo Digital-Print Integration: The Fast Track — Reading through some clips in the wake of the news that Jim Brady is leaving, I was struck by the rapid shift from separate but cooperating news operations to Russian nesting dolls following Katharine Weymouth’s promotion to Washington Post (NYSE: WPO) publisher and CEO of the Media Group: Feb. 7, 2008: From the Washington Post: “Washington Post Media is designed to forge a closer relationship between the business functions of The Post newspaper and, while maintaining separate newsrooms and editorial decision-making.” 

Online Display Ad Spending Dips 6% Through Q3 — A 27% plunge in spending by financial services marketers led to an overall 6% drop in the online display ad market in the first nine months of 2008, compared to the same period a year ago. The percentage declines in both instances mirrored results from the first six months of the year, according to data released by Nielsen Online. Other sectors downsizing display ad budgets included Web media, down 15% to $1.1 billion; travel, falling 7% to $304 million; and retail goods and services, slipping 4% to $833 million. The declines were offset partly by surging ad dollars in the automotive and entertainment categories, which jumped 32% and 29%, respectively. The continued growth in auto advertising online contrasts sharply with the 8% spending fall-off in the category offline. 

Ad-Revenue Sharing Model For Publishers Emerges In 2009 — Advertising networks will begin sharing ad revenue with publishers in 2009. Attributor, which published a study on the ad-serving market this week, will soon offer a service that lets customers monetize content. Rich Pearson, VP of marketing at Attributor, said the Redwood City, Calif. company will rely on technology to automate the process. “We are working with Politico, but it hasn’t been formally launched,” he said. Last week, Reuters–a division of global information company Thomson Reuters–said it will incorporate government and political news from Politico, a unit of Capital News, into its newswire service in a revenue-sharing deal. The group will allow Politico to sell online advertising on their sites. Ad code attached to the media content will determine the revenue-sharing agreement.  

Google, Microsoft, Yahoo Rattle SEO In 2009 — Rival search engines and marketers will continue to fret over Google’s market gains regardless of how the “large actor” acts. Microsoft will “dance and flounder” until cutting a deal with Yahoo toward the end of 2009. The Sunnyvale, Calif. company will need to first find a CEO–which Danny Sullivan, Search Engine Land founder, predicts could happen by February. Whether Yahoo cuts a deal with Microsoft or breaks off and sells the search business remains up in the air. “Yahoo’s CEO will first need to learn the landscape, rather than immediately cut a deal with Microsoft,” Sullivan said. “If a deal happens, it will need to go through a review, which would take two months. By this time you’re in the middle of 2009.” Aside from who’s doing what at search engines, tech-related trends will move beyond Web search results and page content, and into video SEO, local search engine rankings and analytics. Marketers will look for ways to dominate local search results based on demographics. Perhaps local listings will appear at the top, video in the middle and blog search results on the bottom, all on one page. 

NYT Online Ad Revenues Decline In November — It appears that even online advertising–long a growth engine–has started sputtering for the beleaguered New York Times Co. The company said Wednesday that Internet ad revenues across its Internet properties dropped 3.8% in November, compared to a 4.6% gain in October. It marks the first monthly decline in online ad revenue the Times Co. has reported to date. 

MySpace’s Berman: More Ad Products To Come — MySpace has introduced a flurry of new applications and services as it transforms into an advertising-supported social portal, chasing the big bucks spent on Yahoo and Google’s YouTube. It is aggressively leveraging its 75 million active monthly users, each with about 111 friends and spending an average four hours monthly in ways that Madison Avenue and Hollywood cannot ignore. When you can claim nearly 12% of all Internet minutes in the U.S., people will listen. Jeff Berman, MySpace president of sales and marketing, discussed future plans with MediaPost. 

Liberty Media Could Sell Shares Of IAC/InterActiveCorp Until April 2010 — IAC/InterActiveCorp. (NASDAQ:IACI), the New York Internet company, could have Liberty Media (NASDAQ:LINTA) sell shares until April of 2010, reported the Wall Street Journal. The unsourced report in the Heard on the Street column, said the rate at which Liberty Media is going in selling shares of IAC, the company could continue stock sales until April of 2010. According to the report, to avoid the pain of Liberty Media slowly selling its stake IAC could issue a dividend or a buyback of shares. IAC has a market capitalization of USD 2.2bn. Source: mergermarket.

Digital Media VC

Posted in Deals, Digital Media, News with tags , , , , , , , , , , , , , , on December 19, 2008 by Dave Liu

NetShelter Technology Media Raised $11M In Series A — Toronto-based provider of vertical media networks, has raised US$11.1 million in Series A funding. Backers include Rho Canada, GrowthWorks Canadian Fund and JLA Ventures.

BlueKai Raised $11M In Series B — Seattle-based online intent data exchange, has raised $10.5 million in Series B funding. Battery Ventures led the round, and was joined by return backer Redpoint Ventures.

DotBlu Raised $2M In Series A — Online “community dedicated to friendly competitive online gaming,” has raised $2 million in Series A funding, according to a regulatory filing. Backers include Maples Investments and D.E. Shaw. The company is based in San Francisco. Raised Undisclosed Amount Of New Funding — Brooklyn, N.Y.-based developer of local news/blog websites, has an undisclosed amount of new funding. Return backers include Union Square Ventures, the New York City Investment Fund and Betaworks. It had previously raised around $5.4 million. Raised $25M In Series C — Santa Clara, Calif.-based online marketplace for textbook rentals, has raised $25 million in Series C funding. Kleiner Perkins Caufield & Byers and Foundation Capital were joined by return backers Gabriel Venture Partners and Primera Capital. Raised $9M In VC Funding — Dover, N.H.-based online secondary marketplace for timeshares, has raised $8.5 million in VC funding from Edison Venture Fund.

Overlay.TV Raised $5M In Second Round — Ottawa, Ontario-based interactive video platform, has raised C$4.6 million in second-round funding. Return backers include Celtic House Venture Partners, Tech Capital Partners and EdgeStone Capital Partners.

Tagged Raised $25M In Debt — San Francisco-based social discovery site, has raised $5 million in venture debt co-led by Horizon Technology Finance and Leader Ventures. The company had previously raised venture capital from Mayfield Fund.

Taptu £6.5 M In Series B — Cambridge, UK-based pure-play mobile search engine, has raised £6.45 million in Series B funding from return backers 3i Group and Sofinnova investments. Raised $4M In Series A — London-based operator of an online tracking index for concert listings, has secured $3.5 million of a $4 million Series A round led by Index Ventures. The round includes an option to be expanded by $2 million.

Scribd Raised $9M In Series B — San Francisco-based social publishing company, has raised $9 million in Series B funding. Charles River Ventures led the round, and was joined by return backers Redpoint Ventures and Kinsey Hills Group.

Digital Media M&A

Posted in Deals, Digital Media, News with tags , , , , , , , on December 19, 2008 by Dave Liu

Macrovision Sells Off TV Guide Network For Up To $300 Million; Shocker: Also Sells Online — Macrovision (NSDQ: MVSN) is almost done with most of its dispositions, and after selling off its TV Guide magazine for $1 to OpenGate Capital, is getting considerably more for the namesake TV network and the online part: it has sold off TV Guide Network to Allen Shapiro and One Equity Partners for about $255 million, plus up to an additional $45 million earnout payable through 2012. The surprise part: after professing love for network (which includes,, and for the last couple of quarters, it is now washing its hands off it, and bundled it as part of this TV network sale. The deal is expected to close on April 1 next year. One Equity Partners is the $8 billion PE arm of J.P. Morgan Chase & Co. Shapiro was most recently president of entertainment management firm Mosaic Media Group and CEO of Dick Clark Productions (DCP). Shapiro facilitated the leveraged buyout of DCP and became CEO of the company in 2004.

iB3 Networks Goes Social: Buys Entertainment Community And Online Dating Site — Web-hosting firm and online network iB3 Networks (OTC BB:IBNW) is adding a pair of social media properties to its roster:, an online community where entertainers can upload and sell their video and audio clips, and, an online dating service slated to launch in early 2009. iB3 will acquire MGV Communications, parent company of Plugmeister, in an all-stock deal, though the price was undisclosed. According to Eric Schmidt, IB3’s CEO, the site separates itself from other social nets because it gives artists a place to sell their content directly—not just promote it.

Articles of the Day

Posted in Digital Media, News with tags , , , , , on December 19, 2008 by Dave Liu

Glam Claims Confidence On Display Ads—But Cuts Salaries (Just In Case) — Despite months of evidence of display advertising’s increasing vulnerability, female-focused ad network Glam Media continues to claim it has detected no considerable retreat in revenue. The latest claim comes via an internal company memo obtained by Venturebeat that also happens to include news of a switch to “variable pay.” Instead of further layoffs—it cut 14 posts in September as part of what it said was a routine annual review—Glam is cutting salaries across the board with promises to supplement based on revenue. This isn’t the first time Glam implemented this tactic. Earlier this year, the 12-person management team of 12 accepted a temporary 25 percent pay cut. Next year, management will take a 25- to 60 percent cut in compensation. Top sales reps, for example, will now only have about 25 percent of their compensation “fixed.” Before the change, 75 percent was “fixed.” Therefore, sales reps will have to drive more revenue in order to make up the lost compensation.

Barclays Reduces ‘09 Online Ad Forecast To 6 Percent Growth; Total Ad Spend To Fall 10 Percent — Another day, another ad spend downgrade… Online advertising will grow a paltry 6.1 percent to $25.1 billion next year, says Barclays Capital internet analyst Doug Anmuth, in his latest significant downward revision. It was only October when he predicted that web ad dollars would grow 16.9 percent. That was revised down from May’s expectation of 23.4 percent. But as a commenter said on an earlier ad spend outlook, some growth is better than none. Putting things into perspective, the U.S. total ad spending looks to plummet 10 percent to $252.1 billion, Anmuth now says, altering his previous -5.5 percent projection.

Startup Bubble Goes Pop — Last year at this time, news aggregation service Digg hired investment bank Allen & Co. to put itself on the block for an asking price of $300 million. Bloggers predicted that buyers could “easily justify” the price tag for Digg, although no deal ever materialized. BusinessWeek says those were heady days for popular Web 2.0 startups. On Sept. 24 of this year, Highland Capital Partners and three other VC firms invested close to $30 million in the firm. The valuation: $167 million, according to sources close to the deal. Across the board, the value of Web and technology startups is falling. Digg, Facebook, even Twitter, which have built businesses on the back of their popularity, are seeing their once lofty valuations fall back down to earth. “Declining valuations are throwing a wrench into the gears of Silicon Valley’s wealth machine,” says BusinessWeek’s Spencer E. Ante. If the money dries up, startups are forced to shut down.

Casual Gaming Continues Rise — Console games aren’t the only part of the gaming sector having a banner year: The Economist points out that “casual” games, which are played over the Web on a PC or mobile device, are also booming. And while these games may lack the depth of console video games, even the most hardcore gamer would admit that simple puzzle, card and quest games can be just as if not more addictive. Now, thanks to the rise of social networking sites like Facebook and smartphones like Apple’s iPhone, casual gaming is widening its user base. “Social gaming”, or games that can be played between friends on social networks, has become especially popular. Zynga, a developer of such games, has more than doubled its staff since June. Serial entrepreneur Mark Pincus, Zynga’s founder, attributes the success of his company’s games to their social nature. Of course, it doesn’t hurt that the games don’t cost anything, either. Taking a hint from the online gaming model in Asia, Zynga offers its games for free but invites users to pay for optional in-game extras. The startup has had positive cash flow since September 2007.

YouTube: A Money-Maker For Music Labels, But What About Google? — YouTube is driving more than traffic to music labels like Universal Music Group. Rio Caraeff, EVP of UMG’s eLabs, told CNET that YouTube is adding “tens of millions of dollars” to the recording company’s bottom line: “(YouTube) is not like radio, where it’s just promotional … It’s a revenue stream, a commercial business.” The video site shares revenue with record companies like UMG from ads appearing with their music videos, as well as user-generated clips featuring their artists’ tracks. UMG’s eLabs division has brokered such deals with YouTube and others, including MySpace Music, over the past three years, and has made about $100 million dollars off its music videos as a result. By Caraeff’s account, YouTube has been responsible for a large chunk of that (which should make UMG doubly happy, since it, like some other labels, took a small stake in YouTube as part of the content-sharing deal). And while that’s great for the labels, what about Google?

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , on December 18, 2008 by Dave Liu

Velocity’s Miller Out Of The Running For Top Yahoo Job Or Takeover — Velocity Interactive Group’s Jon Miller is not trying to acquire Yahoo (NSDQ: YHOO), nor is he a candidate to replace Jerry Yang as CEO, Bloomberg reports, citing unidentified sources. Miller declined to comment on either point in an interview with Bloomberg. Earlier this month, activist investor and Yahoo director Carl Icahn said he had talked to Miller about plans that the former AOL (NYSE: TWX) CEO was raising money for an acquisition of Yahoo either in whole or in parts. Icahn said he told Miller that this was not a good time for any sale, as he felt Yahoo’s stock, which was trading around $11.35 at the time—as of yesterday, it was up to $13.36—remains undervalued.

No Surprise: VCs Say It Will Be Tough To Get Early Stage Funding In 2009 — If the credit crisis and Wall Street implosion haven’t made it obvious, take it from the VCs themselves: expect fewer startups to get off the ground next year. According to stats from the third National Venture Capital Association (NVCA) Predictions Survey, VC firms won’t have much extra time or money to invest in newer companies in 2009: 60 percent of respondents said there will be fewer seed rounds and 64 percent said there will be a decline in early stage funding next year. On the bright side, about half of the VCs surveyed said late stage funding would actually rise. More after the jump. Internet, media and entertainment to be hit: 58 percent of VCs expect investment in web-based companies to decline, while 71 percent said that the media and entertainment space would receive much less funding next year.

Thomson Reuters Plans To Issue Up To $3 Billion In Debt –This is probably not the best time to ask for more credit, but Thomson Reuters (NASDAQ: TRIN) is planning to issue up to $3 billion in debt over the next two years, Reuters reports, citing regulatory filings. The media company says the debt issuance would go towards supporting general business functions. It said that specific terms for the debt issuance would be provided at a later date.

LinkedIn Founder Hoffman Back As CEO; Yahoo’s Weiner Is Interim President — In a major executive shuffle, LinkedIn founder Reid Hoffman is reclaiming his role as CEO and bringing former Yahoo (NSDQ: YHOO) Jeff Weiner in as interim president, per the LAT. Dan Nye, who’s held the CEO post since Hoffman recruited him for the gig in early 2007, did not reveal what his plans would be once he left the company in January. Nye’s departure comes somewhat out of left field (though the LAT says he’d been discussing it with Hoffman for months), as LinkedIn has flourished under his leadership. The professional social network raised more than $70 million in funding in 2008, including $22.7 million from investors including McGraw-Hill two months ago, and a mammoth $53 million round led by Bain Capital Ventures in June, lifting its valuation past the $1 billion mark.

Meebo To Launch Syndicated IM Service — Web-based chat and IM company Meebo next month plans to launch a syndicated IM service in conjunction with about 35 partners, including movie site Flixster, Web media company Sugar Inc., and social discovery company Tagged. “The service allows users to log into all of their networks at the same time,” Meebo chief revenue officer Carter Brokaw said at an industry summit on Wednesday. Sees Interest From Financial And Strategic Players, But Prefers To Remain Independent, President Say —, (aka Belcaro Group), is on the radar of financial and strategic players, but it prefers to remain independent, said Marc Braunstein, president and co-founder. The Greenwood Village, Colorado-based direct response company receives numerous calls from such players and is “certainly a target” he said, but the preference for the company is not to forego its independence at this time. He added that the company is not looking for external funding. It has “low eight figures in sales.” Belcaro Group, founded more than twenty years ago, is owned by Braunstein and his wife, Claudia. The company banks with Citywide Banks and uses DLA Piper as its legal counsel. provides consumers with online access to coupons, cash back rebates, and catalogs, which is a small piece of the business right now, he said. Retailers pay to access its members. Over the years, the company has had in excess of 10m members, and attracts 100,000 to 150,000 new members a month, noted Braunstein. Source: mergermarket.