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Around May 13, New York based blog Jossip began running with a story that small video-blog/news site Wallstrip was being acquired by CBS.  Information regarding the deal at the time was credible enough to suggest it was highly likely the rumors were dancing around truth, so  I ran with the story here on Metue as well.

Now, a week and a half later, the New York Times has confirmed what many of us already knew: the deal did happen.  While terms weren’t disclosed, CBS did announce the deal and said that Wallstrip would retain its identity.   CBS will work with the creators of Wallstrip to develop Internet programs and information for mobile phones and portable devices.

The Wallstrip content will be added to the portfolio of materials being  produced by CBS’s interactive unit which is actively pursuing an online strategy that includes original content and syndication to web properties including,  AOL, YouTube, and likely, IPTV startup Joost which CBS recently invested in.

The announcement of the deal did not mention specifics regarding the price of the deal. (It was most likely several million dollars below the rumored price of $5m. With $600k in investment and virtually no revenue, it’s more likely the deal topped out at around $2m). Also notably missing in the confirmation of the deal was any information about the fate of Wallstrip’s video host: Lindsay Campbell.

When the first peeps about the deal were circulating almost two weeks ago, most were speculating that Lindsay was a major part of CBS’s interest in the site and purchase  – and that she was only available with the program and not as an independent employee.  Be interesting to see where she ends up. Based on the couple episodes of Wallstrip’s programming I’ve scene, she seems like she could have a successful career in front of the camera. Quoting what I wrote in the previous article on the Wallstrip rumor: "She [comes across as] well educated, credible and articulate, balanced with a style that feels hip, casual and light-hearted enough to appeal to younger audiences in Gen X and Gen Y."

UPDATE

As is often the case in deals involving private companies, especially when the news is still being closely held, there is much speculation regarding terms of a deal, and the finances of the company involved. In my first post on the rumor, before it was confirmed, I noted accurately that reports of Wallstrip having zero revenue were wrong. That’s been further confirmed in the blogs of some of Wallstrip’s investors (here and here). There’s been no information, nor is their likely to be any released, regarding what revenue Wallstrip did or did not have. Characterizing their revenue as “virtually none” was speculative based on the age of the company and the nature of their business. Whatever the actuals, whatever the ROI, I’m sure it’s an exciting time for all at Wallstrip. It’s easy to question deals but speculation takes nothing away from the check they’ve got in their hands for something they built.

As far back as the middle of 2004, video game publisher Electronic Arts (NASDAQ:ERTS) was making moves to establish itself in China (and across Asia).  It’s since developed a substantial presence with a regional headquarters in Hong Kong and studios in Shanghai, Japan, Singapore and Australia.

Yesterday, EA announced it was buying a 15% stake in Chinese video game company The9 Limited.  The announcement is noteworthy, even if largely overshadowed by the more widely reported we’re-going-to-China news from private equity firm the Blackstone Group (which announced China’s national investment agency was making a $3b investment with them to buy a 10% non voting stake).

In the Electronic Arts deal, EA is paying $167m to gain its 15% share of The9 (Nasdaq: NCTY).  EA will also give exclusive licensing rights to The9 for the distribution of EA’s multiplayer FIFA Online game in China.  It’s a deal similar to one EA struck in South Korea with Neowiz in March (EA bought 19% for approximately $105m.)

China is a difficult market to understand and break into if you are aiming to sell products or services to Chinese consumers. (EBay, Yahoo and other companies have learned that the hard way). Not only are customer behaviors different (in gaming, for example, the market tends to favor multi–player online games -so called Massively Multiplayer Online Role-Playing Games (MMORPG) – much more than in the West), but there are also the Governmental and Regulatory bureaucracies to navigate.  Simultaneously trying to learn and manage marketing, sales and political considerations is not an easy task.

The EA deal seems to mark a new type of strategy for wishful corporate suitors. Rather than trying to break in like an adventure traveler with a backpack, a visa and a sense of adventure, Western companies are increasingly trying a more measured “Tour-Guided” approach.   They’re looking for partners who know the landscape and will guide them to the best places to visit.  For EA, the FIFA Online license deal is likely the first of many steps on that walking tour.  If it’s successful, I’d expect to see EA offer similar deals, or partnerships, on the release of other titles as well.

As far as the numbers go, China unquestionably presents a lucrative market opportunity.  IDC has estimated there were 31m online gamers in China in 2006 and Click to Read More

Going, Going,… Gone … Private?

Earlier today, London news wires starting buzzing with reports that one of the globe’s “Big 4” record companies, UK based EMI Group, had agreed to a buyout from private equity firm Terra Firma for £2.4b ($4.7b) (including debt the deal is reported to be worth £3.2b (approx $6.27b)).

At this stage, the deal has only been approved by EMI’s board of directors which characterized the deal as “fair and reasonable.”  In a statement carried on BBC, EMI’s Chairman, John Gildersleeve justified the deal saying, “Terra Firma’s offer delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company.”

The 265pence-per-share offer from Terra Firma still must be approved by the shareholders.  In the event that the deal doesn’t close, EMI will pay a breakup fee of £24m (approx. $47m)

EMI has been struggling over the past year to adjust to the changing landscape of the music industries, particularly the increase it downloadable music.  In a break from it’s peers, and in an effort to capture more from online sales, EMI recently announced deals  to offer its music without Digital Rights Management on both Amazon’s upcoming music store and at industry leader, iTunes.  On Thursday, EMI announced that it had accrued a 65% drop in pretax profit the past year.

Over the course of the year, EMI has been the subject of several takeover rumors.  Previously rejected a takeover bid from US industry rival Warner Music (though some suggest Warner was again a bidder this time).  EMI also supposedly entertained other offers from at least 3 private equity firms before deeming Terra Firma’s bid the most "attractive.” 

Click to Read More

Yesterday Amazon acquired popular London-based digital camera review site DPReview for undisclosed terms. DPreview, which was founded in 1998 by Phil Askey, offers unbiased, reviews of digital cameras and accessories as well as discussion forums, industry news and a product comparison database.

The DPReview site, which has fans on both sides of the Atlantic, has become extremely popular. For March, the site had more than 7m unique viewers. That coincides with the rapid growth in the digital camera marketplace. Last year (digital still-photography) generated nearly $18b in camera sales.

An article on financial news blog Seeking Alpha is noting that the back&ndashend infrastructure for DPReview’s ecommerce links has been provided historically by CNET. If that report is accurate, the purchase by Amazon could steal away some traffic from CNET’s monthly totals.

Following the announcement, web forums have been filled with speculation about the terms of the deal. The web has also been abuzz with questions of whether DPreview will retain its editorial independence. DPReview has largely been known for its unbiased reviews. Fans are questioning whether they will continue to be able offer the same unbiased quality of services that built the site’s reputation if it is now owned by a retailer who will have a vested interest in the reporting it offers. Without that independence DPReview will be no different than any of the many companies providing professional, or user-rated, reviews of cameras: from Yahoo to AOL, etc.

New York celebrity, gossip and news blog Jossip was reporting today that CBS News (CBS Corporation) was acquiring Jossip’s fellow New York blog Wallstrip for approximately $5m in cash with a formal announcement likely early this week.

I try to stay away from reporting on rumors but sources and information regarding this deal are credible enough to suggest it is highly likely the rumors are dancing around truth – though the price may be exaggerated.

Wallstrip is a video blog characterized as one part Saturday Night Live and one part CNBC.   It’s comedic, off-beat approach targets Generation Y and the so-called "YouTube Generation" with 3 minute episodes covering stock market news or corporate with a less than traditional tone.

Wallstrips’s audience is growing but it is not yet substantial and its content is considered inconsistent. It’s most popular episode was a show spoofing CNBC’s Jim Cramer. That episode generated 30k viewers in January. According to a Business Week article Wallstrip did reach 10k viewers in its first three months.  

While Wallstrip did receive 500k in Angel investment, from a technology standpoint there is little to no innovation worthy of acquisition – the site is built using Revver (a YouTube competitor) for its video technology and the open-source Wordpress platform is the foundation of  its website. Wallstrip’s website at this time is not directly ad-supported leading to reports that the company has revenue of $0. Jossip got that part wrong. Revver, the platform Wallstrip is built on (and distributed through) shares revenue from ads incorporated into the video 50/50 with the content creator. Revver’s revenue sharing system is well documented in their sites Frequently Asked Questions section. Still, Wallstrip’s revenue is likely small.

The rumor being reported is that CBS wants the services of Wallstrip’s host, 29 year old actress Lindsay Campbell for its own online, and possibly TV, news services.   (Lindsay’s bio and background can be found here on her personal site. She is originally from Northern California, has a degree from Stanford, and has appeared a number of New York based TV shows including Law and Order and the Sopranos.)

It’s not unrealistic that Lindsay’s caught the eye of folks at CBS. She extremely attractive and manages to comes across as more than just a pretty lady. She is well educated, credible and articulate, balanced with a style that feels hip, casual and light-hearted enough to appeal to younger audiences in Gen X and Gen Y. It’s certainly true that CBS is actively developing its online presence, including last weeks investment in Joost.  Lindsay may fit into that, and based on the rumor, would only sign a contract if Wallstrip was acquired.   

It’s unclear what underlies a price tag of $5m, or if that information is accurate.  Even as a relatively low dollar number, it seems exorbitantly rich for a start-up of Wallstrip’s stage based on available information, and likewise, however talented Ms Campbell may be, and however creative a method of recruiting/hiring personnel, $5m is an exorbitantly high cost for corporate headhunting.

The humorist Erma Bombeck once said “You hear a lot of dialogue on the death of the American family. Families aren’t dying. They’re merging into big conglomerates.”

Looking at some of the biggest corporate acquisitions completed (or in the works) so far this year –, and the power of a few families in those transactions (especially those holding alternate classes of  shares with special voting rights ) – her sentiment may have been more accurate than she intended.

First there was Tribune Co., the countries 3rd largest newspaper company.    It sold to Sam Zell but only after the Chandler family, whose trusts controlled more than 20% of the stock, initiated a strategic review and pushed for its sale.

Now there are two more multi billion dollar sales in discussion, or on the grapevine, where a single family will play a major role:

1.  The Offer:

Today, the Wall Street Journal reported News Corp (Fox, MySpace etc) made a friendly offer of approximately $5billion to acquire Dow Jones, the publisher of the Wall Street Journal, Barrons, MarketWatch and owner of  other financial-information services.  The offer constituted a 67% premium over market value (the stock jumped more than 50% to $56.20 a share. 

The deal, even at a premium, could be a valuable addition to News Corps product portfolio. Based on 2006 revenue, the addition would increase News Corp. newspaper and magazine revenue by a $1b/yr  to over $6b (approximately 20% gain).  The Marketwatch property would also provide another news channel to be added to the new MySpace news offerings.  Given the troubled state of the publishing industry, one has to believe that Rupert Murdoch and his team at News Corp see significant value both in combining Dow Jones business news with Fox TV news properties, and also in the online components of the deal (both those already online, and those that could be).

The Family behind the Scenes:  

The Bancroft family holds 24.7% of the outstanding shares of Dow Jones. The voting rights of those shares give them control 64.2% of the company.  So far, the family has rebuffed the offer.  That may be because they aren’t’ interested in selling but that is unlikely. Since 1986 the family has reduced it’s holdings by more than 50%.   More likely is the theory that the rejection is gamesmanship to further drive the price. Click to Read More

As part of an ongoing effort to get lean and streamline its business ventures, Blockbuster Inc., the leading movie rental chain, sold its UK game retail unit, Game Station, to the British-based Game Group plc for $150m in cash. In a statement, Blockbuster CEO John Antioco said the sale "underscores our intent to focus on our Blockbuster-branded assets in North America in support of our goal to grow our overall share of the video rental market, both in-store and online."  This announcement follows several other similar divestitures.  In 2006, Blockbuster sold its Movie Trading Co. locations and Movie Brands Inc. subsidiary, and sold its Taiwan subsidiary. Blockbuster has also sold its U.S.-based Rhino Video Games.  While much of the sale’s proceeds are earmarked to pay down debt, there is little doubt the company wants more free cash flow available for the heavy toll of marketing expenses it’s been taking in its all-out war with Netflix.