Walk, don't run, to new media

Ex-broadcasters are still enthusiastic but say dotcom business isn't what it used to be

By Ken Kerschbaumer -- Broadcasting & Cable, 10/16/2000

It was only a year ago that a jump from a traditional broadcast-media company to the promise of the Internet, broadband and almost any other "new-media" company seemed like a shrewd move. The executive migration, it seemed, would be endless.

And then came April. The stock market's correction, with its knock on new-economy stocks, rattled many and claimed numerous victims as once promising ventures migrated from the IPO list to the land of "Once upon a time." Zatso's layoffs are only the latest in what have become common ailments in the industry: startup layoffs, outright failures and the challenge of burn rate.

"The psychology of the market is completely different from what it was earlier in the year, so we're obviously trying to position ourselves to maximize the potential of getting our latest round of financing closed," says Microcast Chairman and CEO Paul Nash. "It's been an interesting couple of months, and it's been tough."

Microcast is an example of the kind of company that attracted numerous broadcast veterans. Among its executives who made the switch from the cable and broadcast industries are Richard Burke (formerly of WTN); Rich Frank (formerly of Disney); Gary Montanus (formerly of Worldvision Entertainment); and Andrew Capone (formerly of NBC). The recent Internet chill is something they notice but try to ignore.

"You have to protect yourself from the nature of rumors," says Capone. "We're in a culture where people are almost thrilled to see companies go out of business. It's twisted. We're building a $100 million telecommunications network in a very hot but mercurial business: streaming media. And we're being buffeted by the same winds that everyone else is."

For each of the ex-broadcast executives contacted for this article, the lure of the new-media playground was different. Some saw a chance to leave large broadcast organizations that have layers of bureaucracy, while others found the right fit at the right time.

"I think there were a lot of people who moved over because they were frustrated and saw a land of untold riches in this new-media world," says Ken Solomon, president of iBlast, a datacasting company that hopes to help make broadcasters a major force in the delivery of data and Internet content.

Solomon's previous jobs include working with FOX Corp., being president of Studios USA and co-heading DreamWorks Television. "I had been lucky enough to be at great companies at great times," he says, "but it was time for something new."

For Saul Shapiro, who joined Gist as COO after serving as vice president, broadcast technologies, at ABC Television Network, the move was based on frustration at the slow pace of the rollout of digital services and the feeling that his role at ABC wasn't in tune with what he wanted. Shapiro had also worked as a manager of business development for Sony Electronics, so he had more than a little understanding of what it means to work at successful, large companies.

"The good thing about the old-media companies is, it's very hard to change their strategy," he says. "So every day I woke up and knew what my goals were, because the strategies were clear, time-tested and-almost by definition-successful, because you don't get big and old by failing. But, on a personal level, this is more challenging and exciting."

As numerous companies have been overwhelmed by the challenge and closed up shop in recent months, what had been an attractive leap to new media now seems a risky one. Even so, Jonathan Klein, former executive vice president at CBS News and now president and CEO of The FeedRoom, a broadband-based video news service, still considers it a move worth taking.

"A year ago, it was a deceptively easy decision to make," he points out. "It turns out that a lot more homework needed to be done by a lot more people. That said, people who made the leap a year ago are stronger candidates for new-media jobs, because they have a skill set that will be extremely valuable on either side of the media fence."

Nonetheless, the lesson learned is an old one: Look before you leap. The promise of options and the opportunity to be the next Amazon has given way to the reality that even the first Amazon can fall on less than spectacular times. Companies bragging about IPOs have been replaced by companies bragging aboutnotbeing IPOs.

"The market itself is continuing to look harder at what the costs are, and the ability of a company to go public is being discounted because that's something that really isn't in the cards for most Internet companies," Nash notes.

"I tell people you aren't going to get rich in a month," Solomon says. "If you're making the jump just because you want to win the lottery, don't make the move. But if you want to forge new ground and find new ways to bring people entertainment and information, in some ways, it's better now because you can start to see the forest for the trees. There's still a lot of leaves in the way, but it's getting easier to see what's real and what's not."

In recent weeks, the easiest way to make that distinction is to see who has cash and who doesn't. The venture-capital market has tightened, and those considering a move to an Internet startup are advised to take a look at the startup's books to make sure the money is as real as the idea. A 10,000-gallon fish tank in a lobby may be impressive, but it doesn't necessarily mean a company is destined for success.

"If you're seeking employment at one of these companies, you have every right to ask to see the books," Klein explains. "If you're serious about working there and they're serious about employing you, and you've signed a nondisclosure agreement, you should ask to see some of the detailed business projections. You need to ask some hard questions and look at the facts, because the numbers aren't going to lie."

He also believes potential employees should speak with the companies that are funding the startup to find out why they believe in it and think it's going to last.

For all the recent woes, many who have made the move still see potential in the new-media business.

"I do believe that fortune favors the brave," Solomon says. "And I still think there is a tremendous opportunity not only to move into this world, but to bridge the [broadcast and Internet] worlds. That is where the real gold is."

Media Metrix Definitions:

Unique visitors: The estimated number of total users who visited the reported Web site or online property at least once in the given month. All unique visitors, at home or at work, are counted only once.

Sample Size: Approximately 55,000 individuals throughout the U.S. participate in the Media Metrix sample.