By: Steve Outing
Three years and $9 million after nine newspaper companies attempted to create
a consortium to dominate the Internet news business, they’ve given up
NEW YORK ? New Century Network (NCN) last week fired its 40 remaining employees and announced it had been dissolved by its board of directors. All NCN operations have ceased.
A statement issued by the NCN board said, “We were unable to agree on a business plan that would receive the support of enough partners to enable us to move forward. The world of content and commerce on the Internet has been transformed since NCN was created in 1995. The challenge of finding a strategy for NCN in this fast changing marketplace has proved too daunting.”
Launched in early 1995, NCN was a cyberspace consortium formed by nine of the largest U.S. newspaper companies to exploit the collective strength of U.S. newspapers on the Internet. Each of the companies ? Advance Publications, Cox, Gannett Co., Hearst Corp., Knight Ridder, New York Times Co., Times Mirror Co., Tribune Co., and the Washington Post Co. ? provided at least $1 million to the effort.
But despite $9 million in operating funds and access to the news resources of so many established newspapers, NCN was beset by a lack of consensus among its owners about what online businesses it should be engaged in. NCN’s charter required that at least a strong majority of the founders agree on any particular NCN business venture. But insider reports indicate that that sort of consensus was difficult to achieve.
Most NCN board of directors members, who made the final decision to disband the organization on March 9, either did not return phone calls for comment or refused to talk about the decision. But board member Michael Newhouse of Advance Publications commented, “I’m very sad to see NCN end this way. I don’t feel like talking about it right now.”
Word of NCN’s final demise came only two weeks after the company announced its second round of layoffs in a month. The first sign of serious trouble at NCN came several weeks ago, when 10% of the once 70-member staff were laid off and the “NewsWorks” newspaper Web site news aggregation and search service was cut back because it was deemed to be competing against the sites of NCN affiliates. Not quite two weeks ago, another 20 NCN staff members were laid off; those cuts emptied NCN of most of its editorial employees.
As reported on page 42, NCN had been trying to put together a Web search/directory deal that would allow newspaper Web sites to add Yahoo!-like functionality. The search engine would have allowed visitors at newspaper Web sites to search the entire Web, much as they do on other search engines like Excite, Lycos, or InfoSeek. Search engines are among the most heavily visited sites on the Internet, some logging as many as 10 million visitors a day. These same search engine sites have also added increasing numbers of breaking news features and services that directly challenge the newspaper business.
NCN team members had developed proposals that were on the road to making the newspaper industry search engine concept a reality, but NCN’s owners couldn’t agree on a plan.
Just two weeks ago, NCN officials were saying that the company would focus largely on its newspaper Web site advertising network, which had generated close to $1 million in national Web banner ad sales spread across NCN’s affiliate sites. The ad network was doing well, with projections for 1998 of three times that figure.
But even the ad network fell victim to the founding companies’ competing interests. Several NCN founding companies ? most notably Knight Ridder, Cox and Tribune Co. ? have competing Web advertising networks among their own properties.
After its recent layoffs, NCN officials also had said they would focus on being an Internet tools and services provider for newspapers. A recent introduction was an HTML e-mail news delivery service used by affiliate newspaper sites. That too dies with NCN and its future under the aegis of some other entity is unclear.
It’s uncertain what will become of NCN’s work to date. According to CEO Lee deBoer, NCN’s assets will just “go away” unless someone comes forward to acquire them.
DeBoer will stay on to wind down the company, and he says NCN will entertain a liquidation of its assets. The most likely scenario is that some of NCN’s work will end up being run by other companies or a smaller group of companies ? probably NCN members.
Whither NCN banner ads?
NCN newspaper affiliates might worry that the most immediate impact of NCN’s demise will be the national advertising that they were receiving. However, New York-based Real Media, a Web advertising network and technology provider that had a cooperative arrangement with NCN previously, has announced that it will step in to fill the void left by NCN.
Real Media president Dave Morgan says that his company had been providing technology to the NCN ad network and had been cooperating on national ad sales. While NCN’s sales reps were focusing on national banner ads placed onto newspaper Web sites, Real Media was focused on customized content sponsorships (for example, for aggregated content sites covering news and sporting events). Real Media focuses mostly on the newspaper industry and affiliated companies. It also counts as clients companies like Lexis/Nexis, TotalSports, Times-Mirror Magazines and The Headbone Zone.
For the short term, Morgan says Real Media will work with NCN’s wind-down team to physically maintain ad campaigns that already are running. He’s also talking with some of NCN’s owners about creating a joint venture that would keep the ad network concept running. He says Real Media is trying to move fast, and that the company already has relationships with nearly all of NCN’s affiliate newspapers. Still, some loss of income for the newspapers is likely, due to the loss of the NCN sales reps. Real Media may be hiring some of those people.
Morgan says he’s sorry to see NCN self-destruct, but “they accomplished a lot of very positive things. They got the industry as a whole focused on the Internet as a business.” He thinks that NCN should have made the ad network a higher priority, which might have generated enough excitement and cash to keep the owners hooked.
NCN first became a gleam in the newspaper industry’s eye as early as 1994, when talks began among the eventual partners to cooperate in creating a cyberspace umbrella organization for the industry.
It operated without a permanent CEO until June 1996, when deBoer, a cable industry executive, took over from interim CEO Peter Winter of
Cox Enterprises, one of NCN’s founding companies. NCN truly got off the ground in July 1997, when its national Web site advertising network launched.
CEO deBoer says he has not yet had time to think about his next career move. He says that board members, although not agreeing amongst themselves about core NCN strategy, were supportive of what the organization tried to do. This venture “had a high degree of difficulty attached, but it was worth trying,” deBoer says.
?(NCN CEO Lee deBoer got high marks from board members for his effort to build a workable online newspaper consortium. He will stay on the job a while longer to liquidate NCN assets and attend final details of the shutdown.) [Photo & Caption]
?(Outing is a three-times-a-week columnist on E&P’s MediaINFO.
web site.) [Photo & Caption]
?(E&P Web Site: http://www.mediainfo. com)
?(copyright: Editor & Publisher March 14, 1998)