Big Media's Swipe at YouTube

NBC and Fox have a new video service, but they have offered few details on just how they'll compete with the Google-owned powerhouse

Stop me if you've heard this before. Two major media companies ally themselves to fight off a nasty online competitor that distributes their content for free. The two form a joint venture, put their content online, and charge consumers for the right to get it nice, neat, and legal. I'm going to bet what jumps to mind is the music industry circa 2001, when Sony (SNE) and Universal formed a company called pressplay to take on Napster.

Uh, no. This time, it's Fox (NWS) and NBC/Universal (GE), which announced on Mar. 22 a joint venture for a company that will put their TV shows and movies online to take on Google's (GOOG) hot-as-fire YouTube video site.

Granted, the two companies took great pains to say this wasn't, in News Corp. President Peter Chernin's words, "a YouTube killer." Both Chernin and Jeff Zucker, the incoming CEO of NBC/Universal, stressed that their as-yet-unnamed site, which will stream shows from Fox, NBC, and other outlets, was a play to aggregate content in one place for the ease of consumers.

And to prove their point, they've signed deals with some of the biggest aggregators around—AOL (TWX), Yahoo! (YHOO), MySpace, and MSN—giving them a whopping 96% of monthly U.S. unique users and such well-heeled charter advertisers as Cadbury Schweppes, Cisco (CSCO), Intel (INTC), and General Motors (GM).

Yet Chernin and Zucker were woefully short on the details of exactly how their service will take on YouTube. The Google-owned powerhouse delivers all manner of content—much of it free and without ads—to an estimated 130 million unique eyeballs a month.

Content Matters

To say that the new joint venture isn't ready for prime time is an understatement. Start with the fact that anyone who goes to the new Fox-NBC site for, let's say, Grey's Anatomy, won't find it.

That's because ABC (DIS) seems perfectly happy with its own, which helps burnish the network's brand, a key part of Bob Iger's strategy. As for traffic, Iger told Disney shareholders on Mar. 8 that the site had delivered north of 55 million downloads of its shows since launching last summer.

Disney isn't commenting, but Chernin acknowledges that Disney is focused more on brand at the moment. The clear inference: Don't look for Disney to hop on board any time soon.

How about if you go looking to download CSI, CBS's (CBS) powerhouse show? Well, you're not going to find that on the new NBC-Fox joint venture either. You'll have to head to CBS's innertube site or maybe buy it from iTunes (AAPL).

CBS issued a statement that "as with all exiting and potential partners, we will continue to discuss opportunies with NBC and Fox to determine if we can work together in the future, and we wish them well." Not exactly a ringing endorsement.

Fighting for Rights

Heck, the NBC/Fox site doesn't even yet have the rights to Fox's own American Idol, which Chernin said has "about 16 different stakeholders." Fox doesn't control the online rights to the monster hit, Chernin allowed, and getting them "right now is not on the table."

In fact, that may be the key element that separates what Fox and NBC are trying to do from the YouTubes of the world. With its crazy quilt of rights, the TV world is a tough place to aggregate content in the manner that the two media companies would like. Studios maintain the digital rights for shows they make for other companies' networks, and British companies import their programs to the U.S.

Chernin tells me that that's O.K. for now. He figures he'll get more rights, and in any event he has more than anyone else for now.

"It's like the old joke about running from a bear," he says. "I don't need to be faster than the bear, just faster than you. And this deal is faster than anyone else out there. We have the most content."

Maybe, maybe not. And what if they don't have the content people want? But it may be even worse when it comes to content to which the new Fox-NBCU site does have the rights.

Zucker said the site will offer TV shows on the same terms as NBC and Fox's individual sites. Looking for NBC's new comedy 30 Rock? A trip to the NBC site shows only 5 of the 17 episodes aired this year are available.

Where are the others? Almost certainly yanked down to save for the inevitable compilation that NBCU will sell as a DVD. Chernin says it will likely be the same for episodes of Fox's 24 . So if I'm a 24 junkie and I desperately need my fix of Kiefer Sutherland, you know that I am going to head over to YouTube.

More Offerings Needed

Clearly, Chernin and Zucker need more companies to sign on. And they need to offer fans more episodes of their favorite shows. With so little information having been given out so far, it's not hard to imagine that there are other trip wires to be found that may make this less than a great launch.

Still, Chernin and Zucker are smart guys. They have a bunch of committed folks behind them who want to make this work, not the least of whom is News Corp. Chairman Rupert Murdoch, who most certainly doesn't like his content showing up on YouTube.

So I figure Chernin and Zucker will go into overdrive trying to make this new joint venture—whatever they call it—work. Expect Viacom (VIA), with its treasure trove of shows from MTV and Comedy Central, to be high on the list of targets.

I'm pulling for Chernin and Zucker to pull this off. The plan is for a launch sometime this summer. By then, maybe they'll have the bugs out. Maybe Google will sign on. Maybe my wife can get Grey's Anatomy on it. Otherwise this could be pressplay all over again. And no one wants to see that rerun.