News Corp. shuns Fox Interactive in ROO deal
Michael Arrington
15 comments »
The Wall Street Journal reported (behind paywall) this morning that News Corp would announce a $12 million investment in online video startup ROO. However, unlike other investments and acquisitions in Internet startups, News Corp. subsidiary Fox Interactive wasn’t involved in the deal. Fox Interactive owns Myspace and has made investments in startups such as SimplyHired. They are the Internet arm of News Corp.
From what we are hearing, not only was Fox Interactive not involved in the deal, they didn’t even know about it. The rumor is that Fox Interactive execs only heard about the investment when they read the WSJ article this morning. And they weren’t happy. An insider told us that they were incredulous News Corp. would do an Internet deal without Fox Interactive’s involvement (or at least knowledge), and said he couldn’t believe News Corp. invested in that “fucking disaster.”
Adding to the embarrassment - Fox Interactive has been having separate conversations with ROO competitor Brightcove, which recently raised nearly $60 million in a round of financing that valued them at a rumored $220 million. Fox Interactive was reportedly in conversations to acquire Brightcove just prior to the closing of that financing, for $250 - $300 million.
This is clearly a case of the right hand not knowing what the left hand was doing.
Fox Interactive has been weakened since the departure of former head Ross Levinsohn, who was replaced by an executive with little Internet experience. The fact that News Corp. made a significant investment in an Internet startup without consulting Fox Interactive suggests News Corp. is no longer looking at their Interactive subsidiary to guide them with online strategy.
Update: I got an email from another insider that suggests the initial Wall Street Journal report was incorrect and that News Corp. received warrants to acquire stock in ROO based on certain revenue/performance thresholds. Despite reports coming from Fox Interactive PR that they did know about this deal, we’re sticking with our initial assessment that this was a complete surprise to them.
Is it really that surprising that Fox Interactive was bypassed? RooTV has been providing Video for the leading News Corp site in Australia (news.com.au) for a long time now, and probably other media parts of the News Corp empire that aren’t tied in with Fox Interactive. It makes sense really, the fit is better with the publishing arm than the interactive arm…although I’ll have to point out with the irony in Fox Interactive getting upset: rootv.com is registered to Petty Consulting
Im surprised Newscorp wouldnt let their experts (fi) handle this arm of the empire.
Why was my comment deleted? Michael, am I no longer wanted on your blog? I raised a serious question - who cares about this?
I didn’t delete anything - ph, your insightful comments are always welcome here.
12 million is way beter than 200. I hin the interactive folks got their ego hurt; and should probably get a good talking too.
I have worked with these people in the past and it’s a matter of lack of communication and silos within a large organization.
My educated interpretation of this intriguing development is that Fox as a media giant is probably thinking of going big into putting their shows online. Eventually they’ll get either ROO or Brightcove to do it, but they do have hours upon hours of tapes sitting on shelves gathering dust, why not put them online to generate some ad revenues.
For instance, their hit show “American Idol” must have hundreds, if not thousands, of hours of audition tapes of Idol wannabes who did not make it, and some of those failed auditions have proven to provide more entertainment value than the polished ones who made the cut. Conceivably, Fox could put all those audition tapes online and make some extra dough.
After seeing the “you are the 999,999 visitors to enter, please click here” advertisment in their frontpage, i’d say that this isnt serious at all.
@ video, most people have expected this in the market since last year. No big surprise to see News Corp make the Roo move.
Disaster is correct. ROO management has no clue and they are still dealing with streaming. Biz model for the company is good however. Id say its unlikely news corp actually put cash into this company. Remember they did a deal with news corp sometime ago and most likely needed to give warrants in order to get the deal. Doubt news corp would exercise those warrants anytime soon.
I know the ROO people and business very well as a former employee. They pulled this deal out off their ass and like everything else they have done, they’ll screw it up, too.