Comcast Makes Calculated Bet on Online News

The segment is focusing on increased original reporting

   
Comcast Makes Calculated Bet on Online News

Comcast‘s (NASDAQ:CMCSA) NBC recently became the laughing stock of the media world when it fell to fifth place in the television ratings, trailing even Spanish language channel Univision.

When it comes to online news, however, the peacock network is making all the right moves.

As The Wall Street Journal recently reported, NBCNews.com — the online arm of its NBC News program — is beefing up its editorial staff by adding about 75 people and hopes to better integrate itself with the rest of the network’s news operation.

This comes in the wake of the Philadelphia-based company’s decision to end the joint venture with Microsoft (NASDAQ:MSFT) that ran MSNBC and its online arm for more than 16 years.

Executive Editor Gregory Gittrich said the unit is focusing on original reporting and has “picked stories to own.” Even more radical, it has scaled back on its use of wire stories and banned them altogether in some instances. Plus, NBCNews.com is establishing offices in New York City, Seattle and London.

This is more than just a radical departure from the strategies of other companies like Disney (NYSE:DIS) and CBS (NYSE:CBS), which either use partners like Yahoo (NASDAQ:YHOO) or their network affiliates for their content.

It’s also is a very smart idea.

Right now, the site ranks fourth among general news sites, attracting 52 million monthly users. ABC — thanks to its partnership with Yahoo News — is first with 82 million, while fifth-place CBS attracts 36 million monthly visitors.

Those rankings aren’t going to change if NBC pursues the same strategy as its rivals.

Plus, the audience for network television news is declining and continues to move to online sources. And in today’s media universe, original content is king while all other content is at best a duke and at worst a peasant. With that in mind, the time is right for NBC News to create a distinctive online voice.

If it can successfully do so and consistently break news, it will be a moneymaker for Comcast — particularly as the rate of digital advertising growth continues to outpace print. NBC News generated about $900 million in revenue last year, but its potential for growth is limited if doesn’t focus beyond the television screen.

The secret in creating original content isn’t money — another good sign. Indeed, online media outlets such as Gawker often break huge stories — as was the case of the non-existent girlfriend of Notre Dame football star Manti Te’o — at a modest cost. The triumph of Gawker’s Deadspin blog in this explosive story came at the expense of the so-called worldwide leader in sports and most lucrative cable channel in the world.

ESPN’s staff no doubt dwarfs Deadspin’s, which underscores a sad fact in the news business: bigger isn’t always better. Blogs and other small news operations regularly scoop the giants of the news world — part of the reason it’s imperative for NBCNews to remain a nimble organization. Advertisers will pay premium rates to support original content vs. articles that are on thousands of other sites.

All in all, from the looks of it, Comcast’s new strategy for this segment does look mighty promising. And if NBC’s online imitative does prove to be successful, look for the other networks to do the same thing.

Imitation isn’t just the most sincere form of flattery in the television business — it’s how business is done.

Jonathan Berr has contributed to NBCNews.com. As of this writing, he did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/03/comcast-makes-calculated-bet-on-online-news/.

©2014 InvestorPlace Media, LLC

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