Written by Om Malik
Posted Thursday, August 9, 2007 at 10:50 AM PT

 

NewCo: No Name and $100 million in the bank

It’s a testament to both the madness in the private equity markets and the hype around online video taking place right now that a company without a name, a website or even a clear exit strategy has been able to raise $100 million dollars at a market valuation of $1 billion.

wreckwatch.gifYes, that’s right, we are talking about NewCo, a joint venture between NBC (GE) and News Corp. (NWS), and their partners that was unveiled back in March.

Providence Equity Partners, a Rhode Island-based investment house, must have a good reason behind this investment, just like it must have had its reasons to fund dozens of (now defunct) telecom operators during the optical and telecom bubble of the late 1990s.

“It’s a sign of the times when a company that didn’t exist a couple months ago can raise this kind of money,” Todd Dagres, general partner at venture capital firm Spark Capital , told The New York Times. Others, like Roger McNamee, a partner at private equity firm Elevation Partners, expressed his doubts, pointing out that joint ventures rarely work out. We couldn’t agree with him more.

We had reported NewCo’s fund raising efforts a few months back, wondering what a prospective investor would see in this new online video destination, whose chances of dislodging YouTube from the top spot are about as high as Tampa Bay Devil Rays winning the American League Championship.

Even if you take YouTube out of the equation, the content libraries of NBC and News Corp. may not be enough to amount to a sustainable, and profitable, business. And then there is the utter confusion the two JV partners are going to end up creating in the market. News Corp’s MySpace has MySpaceTV, while NBC is busy launching different sites – moves that diffuse the extent of their new partnership’s potential reach.

NewCo, recently hired former Amazon.com (AMZN) executive Jason Kilar as its chief executive and has 120 people working in its L.A. office, the New York Times reports. But it’s going to take a lot more than $100 million, a CEO and big talk to beat Google (GOOG). It would take new thinking. Although from my own experience, I can tell you: it’s tough to teach old media dogs new tricks.

Related Stories:

1.Google vs all corporate monsters.
2. NewCo: Nuts and Bolts from an Insider.

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Comments & Trackbacks

  1. 100 M is definitely nice for not having anything running out there. The success of this service depends on seamless integration with TV broadcasting model.

    Here is my recent post about i-CAUGHT a similar offering from ABC, which is doing a decent job at this.
    http://abhishek.tiwari.com/2007/08/09/i-caught-i-caught-on-abc-last-night/

    shekyboy on August 9th, 2007 at 11:51 am - Permalink

  2. I think the name of the “new site” is “myspacetv.com” This is the only name make logical sense to me with the time frame that everything happen including when this news broke, the launching of “myspacetv.com”, the price tags slab on the site of $1 billion, and the traction that the site needs for a quantum leap at launch time.

    Woody on August 9th, 2007 at 4:23 pm - Permalink

  3. [...] from the big boys According to Om Malik of GigaOm and NewTeeVee, GE and News Corp have raised $100 million for their new online video [...]

    More from the big boys « Jason Rosenberg on August 10th, 2007 at 11:50 am - Permalink

  4. [...] settimane fa, un’articolo di NewTeeVee parlava dei 100 milioni di dollari investiti da Providence Equity Partners nella [...]

    Online Video: è arrivata Hulu | Stalkk.ed on September 3rd, 2007 at 12:06 pm - Permalink

  5. [...] which has $100 million in funding from Providence Equity Partners, is supposed to launch in private beta by the end of October, a [...]

    NBC Confirms Pulling YouTube Content for Hulu « NewTeeVee on October 22nd, 2007 at 12:34 pm - Permalink

  6. [...] which has $100 million in funding from Providence Equity Partners, will let in thousands of private beta testers this week, and tens [...]

    Hulu Debuts to Meet Foes and Find Friends « NewTeeVee on October 28th, 2007 at 9:12 pm - Permalink

  7. [...] AM PT Comments (0) Ever since Hulu, the online-video joint venture backed by NBC, News Corp. and $100 million in private equity launched in March 2008, the service has been slowly winning over critics, including yours truly. And if that [...]

    Hulu Getting Ready To Go International - GigaOM on August 20th, 2008 at 10:31 am - Permalink

  8. [...] Earlier today it was reported that the company is looking to raise about $100 million on a whopping valuation of $2 billion. Nevertheless, the names — Fox, Sony BMG, Universal Music Group Warner Music — involved in the project are going to draw comparisons with another service, Hulu, which had raised a similar amount at a $1 billion valuation, even without a name. [...]

    Why MySpace Music is Likely to Fail - GigaOM on September 15th, 2008 at 12:00 am - Permalink

  9. [...] out last year. One of MGM’s largest shareholders, Providence Equity Partners, also ponied up Hulu’s $100 million in outside funding. MGM co-president Jim Packer told the NYT, “We will have some long-form videos up on YouTube, [...]

    MGM Gives (a Tiny Bit of) Full-Length Video to YouTube « NewTeeVee on November 10th, 2008 at 11:39 am - Permalink

  10. [...] Barbarian at the Gate, and place Australian TV programming online, ad supported ala Hulu. And given Hulu raised $100m @ $1b valuation first round (watch the Arrington/DeWolfe Paris Hilton dating interview vid) the private equity guys can claw [...]

    Ben Barren - Confessions of a Mad Man » Video Warz : Sergey/Brin 1st : Rupe 2nd. on January 5th, 2009 at 7:22 pm - Permalink

  11. [...] probably thinking, why would Fox and GE sell their pet project to Yahoo? Well, why not? After all, they took a $100 million investment from Providence Equity Partners, which means they have an interest in making some sort of a return on this company. By selling to [...]

    Why Yahoo Should Buy Hulu on January 14th, 2009 at 5:11 pm - Permalink

  12. [...] probably thinking, why would Fox and GE sell their pet project to Yahoo? Well, why not? After all, they took a $100 million investment from Providence Equity Partners, which means they have an interest in making some sort of a return on this [...]

    The Praized Blog » Blog Archive » Om Malik Says “Yahoo! Should Buy Hulu”. It Won’t Happen and Here’s Why. on January 15th, 2009 at 3:08 pm - Permalink

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  14. Hello. Great job. I did not expect this on a Wednesday. This is a great story. Thanks!

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