On the Internet, Turner Discovers Small Is Beautiful
By MATTHEW KARNITSCHNIG
January 4, 2007; Page B1
ATLANTA -- Under founder Ted Turner, Turner Broadcasting built its name making risky bets on everything from its cable "superstation" to a 24-hour news network. Today, the freshness of those concepts has faded, and the company is part of media giant Time Warner Inc. But Turner's innovative spirit lives on, especially on the Internet.
Time Inc. has launched a number of failed sites out of its magazines (and some, like Office Pirates, from scratch) and AOL has had only mixed results with its content plays. With less fanfare, however, Turner has developed two of the top Web sites in all of Time Warner: CNN and CNN/Money, a joint venture with Time Inc. Atlanta is no Silicon Valley, but being away from the glare hasn't hurt the venture.
And now, on its midtown campus here, across the street from the building where Cable News Network was born, Turner has set up a small team to develop more Web businesses. Many of the ideas for new Web ventures originate within the company's ranks and Turner management has given the team broad license to experiment.
In recent months, the team has launched ACC Select, a subscription site which airs Atlantic Coast Conference basketball games along with other college sports; CNN Pipeline, a subscription-based online news video service; and another such service, Very Funny Ads, which shows humorous television commercials. This month, the company plans to launch SuperDeluxe, a site with original short-form comedy clips.
"We're building businesses outside our core that allow us to compete for other pools of money," says Turner Entertainment Group President Mark Lazarus. Turner's cable networks are performing better than those of many rivals, but the gradual decline in cable advertising growth to just 3% in the first nine months of 2006 from more than 25% annually a decade ago, has forced the company and its rivals to look hard for other revenue streams.
Unlike competitor Viacom Inc., the parent of MTV, Nickelodeon and several other cable properties, Turner doesn't own most of the content that appears on its biggest networks, TBS and TNT. That means it can't repackage much of its television programming, which includes popular sitcoms like "Seinfeld" and dramas such as "Law & Order," for the Web or mobile devices.
"Turner is being forced to look elsewhere in businesses where they're not as established," says Pali Research analyst Richard Greenfield.
Turner executives readily acknowledge the challenge, but they also insist that not being tethered to their cable content forces them to innovate. And they're thinking small. "Not all of these sites are going to generate five million unique visitors a month," Mr. Lazarus says. "But if we can build a few businesses to get to that point, then we're doing pretty well. Our thinking is that it's OK to have a few midsize businesses." Turner expects total Web revenue to grow about 30% annually on average through 2010.
Turner's low-cost, niche approach contrasts sharply with the strategy of some rivals. For one thing, it has no "digital czar" steering its overall strategy. Turner Chief Executive Phil Kent says centralizing Web functions can stifle creativity. Turner has also resisted the temptation to put its TV brands, with the exception of CNN and Cartoon Network, at the center of its Web effort.
Having an established name isn't always of much help on the Web, as the huge popularity of come-from-nowhere brands such as YouTube and MySpace demonstrates. A mainstream image can actively hurt. And media companies have found that shoveling existing content onto a new platform can hinder them from developing programming best suited to the Internet.
Recognizing that its core properties, TNT and TBS, were of little value on the Internet, Turner decided to build Web sites with new names. Typical of that strategy is veryfunnyads.com. Late last year, David Rudolph, the Turner executive who heads the Atlanta development team, challenged his colleagues to conceive and implement a new business concept in 30 days. "The goal was to say within the company that it doesn't take years to go from idea to launch," he says.
The team missed its deadline: It took 40 days to put the site into service. Mr. Rudolph had intended for the project to be a learning exercise, but it was received so well internally that he decided to go ahead and launch it. To save money, Turner did no consumer research to gauge interest in the site but timed its unveiling to coincide with "World's Funniest Commercials," a TBS special that aired August 2006. So far, veryfunnyads.com has streamed about 30 million videos, a respectable tally.
ACC Select has a similar history. Mr. Rudolph wanted to see if it would be possible to film college athletic events and create a "TV-like experience" on the Web on a production budget of $1,000 per game. The idea was to focus on sports that aren't covered by broadcast and cable networks but have a small and loyal following. Using off-the-shelf video components, the team assembled a game kit with four cameras for about $35,000. In May, ACC Select covered its first event, a Georgia Tech baseball game. The production cost: just under $1,000.
The service launched in September and now covers about 100 live events per month at a cost of about $1,200 per game. Users pay about $5.95 per month or $3.95 per game to watch. Turner doesn't disclose how many subscribers it has but executives say they're averaging a couple of hundred viewers per event with popular basketball games drawing a couple of thousand viewers.
Turner's past Web track record centers on CNN.com, which has been a steady performer since its launch in 1995. Cartoonnetwork.com, the online derivative of Turner's children's channel, has about nine million unique visitors a month and grew by about 90% in the past year. Turner also operates Web sites for others including golf site pga.com and Nascar's Web site.
For all of its recent attention to the Web, Mr. Kent, the Turner CEO, says the company will remain firmly rooted in cable television for some time to come. Of the rush by old-line media companies to the Web, Mr. Kent says: "We're in a period of maximum paranoia and minimum clarity."
Write to Matthew Karnitschnig at
matthew.karnitschnig@wsj.com
"I used to be on an endless run.
Believe in miracles 'cause I'm one.
I have been blessed with the power to survive.
After all these years I'm still alive."
Joey Ramone, em uma das minhas músicas favoritas ("I Believe in Miracles")