January 31, 2007
News Corporation Investing in ROO, Alongside Plenty of Controversy

While 20th Century Fox may be issuing a subpoena for YouTube, News Corporation will be investing 10 percent of the Internet television network ROO, the company whose service drives the video offerings on the Fox News Web site.

The deal, announced Monday, will be that News Corp. will gain 5 percent of the shares of ROO initially and then get 5 more percent "after it meets certain revenue-based milestones based on its usage of ROO's services," according to Daisy Whitney with TelevisionWeek. The deal is valued at approximately $12 million, according to The Wall Street Journal.

The sale has led to some controversy, based on Michael Arrington's TechCrunch post about how Fox Interactive wasn't involved in the deal. He writes, "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" (emphasis his).

However, those Rumorbusters write that these reports are "pretty much all wrong."

Rumorbusting emphasizes that the management did know about the Roo deal. They quote an executive as saying, "Basically, Roo agreed to give News Corp some free shares and warrants in their company in exchange for News Corp continuing to use services it already receives from Roo. News Corp didn't write a check and doesn't have to use the services."

Nevertheless, Arrington's update at the bottom of the page says, "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."

As usual, in the blogosphere, we always have to wonder just which source to trust. At this point, I guess you'll just take your pick.

Just last week, I wrote about new deals for Veoh and Brightcove, with Veoh forging a partnership with Us Weekly to launch an online celebrity news and entertainment show, while Brightcove has secured an additional $60 million in additional funding.

And, with new compensation services planned for content providers, avenues for user-generated video are also developing more developed business models, as I mentioned yesterday with YouTube's plan to share advertising revenues with content owners, as well as Metacafe's Producer Rewards program.

What this all means for long-term new business models has yet to be determined, but there's no question that it's transforming current business practices, especially for niche-marketed products.

But, as old media money continually funds into new media startups, these online viewing activities move closer to the center of the mainstream from the margins of lead users.



TVKoo is a P2P live streaming web, very interesting and much better than what brightcove claimed.


Eric, thanks for the note. For those who don't know much about TVKoo, the Web site is here.