Seeds of second dot-comming?

By: Carl Sullivan

The last days of 2000 also were the last days of a number of dot-coms, including content sites. No newspaper Web sites went out of business, but there were layoffs in newspaper-related new-media departments.
Most recently, Rupert Murdoch’s News Corp. ? parent of the New York Post ? announced Thursday it planned to realize “significant cost savings” by closing News Digital Media, its U.S. online subsidiary. In this bleak environment, what’s a newspaper Web site to do?
“We’ll probably be more careful as to who we do deals with,” said Tony Lee, editor in chief and general manager of CareerJournal.com, the free employment site of The Wall Street Journal. Like many Web sites, CareerJournal had relationships with other dot-coms that went belly-up last year. Lee thinks many site managers were too quick to sign deals with startups that had good ideas or cool technology. “Unfortunately, three months later, they’re gone,” he said.
Lee is among the crowd that thinks newspapers may actually benefit if the dot-com shakeout continues. “In a downturn, papers aren’t affected like
startups,” he said.
Newspapers are certainly no strangers to recessions and advertising declines. That institutional knowledge will help newspaper new-media operations survive, even if their online-only competitors don’t.
At the corporate level, many newspapers have to decide what to do with their investments in dot-com startups, said Rudy Santoro, national director of the publishing and media practice at Deloitte & Touche in New York. “Many are in a dilemma: should I continue to fund this dot-com?” said Santoro, who will help his newspaper company clients decide whether the time is right to take some write-downs on investments that haven’t panned out. He pointed to one newspaper’s $15-million investment in a dot-com that’s worth about only $2 million today.
Despite the losses, Santoro offers praise to newspaper execs. “Most newspaper publishers were smart in that they didn’t want to take on many of the risks of these new ventures themselves,” he said. “Newspapers knew it was a gamble.”

(Editor & Publisher Web Site: http://www.editorandpublisher.com)
(copyright: Editor & Publisher January 8, 2001)

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