ABC Is Latest Net to Seek Web Alliances

NEW YORK ABC is in talks with several Web sites as it tries to create a broad digital distribution platform for its programming, becoming the latest network to signal a reversal in its online strategy. Like other networks, ABC initially took a go-it-alone stance, but is now looking to partner with Internet players they don’t own or operate in an effort to maximize, and monitize, their programming online.

The effort comes just four months after CBS completed a round of digital distribution deals—with AOL, Microsoft (MSN) and CNET Networks, among others—creating what the No. 1 network calls the CBS Interactive Audience Network. And Fox and NBC created a digital distribution venture called Hulu, also bringing in outside partners.

Privately, network officials concede that their previous plans simply did not generate the online revenue they believe reflects the full value of their content, and the recent partnerships are intended to drive more viewers online, thereby generating more ad revenue.

ABC is believed to be talking to AOL, Comcast, MSN, MySpace and Yahoo about new distribution agreements, but network officials declined to identify any of the parties. Albert Cheng, evp, digital media for Disney-ABC Television Group, would only say one deal will be announced this fall.

Interestingly, the networks are taking different approaches to achieve similar results.

As a way to retain a certain measure of quality control and consistency, ABC is inserting its core video player into the center of the distribution agreements so that viewers will have the same experience on a partner site that they would on ABC.com and its affiliates, said Cheng. “The difference is some of our competitors are showing their video in a playback experience determined by the platform distributor within their framework,” he added.

Patrick Keane, evp and CMO, CBS Interactive, said its distribution partners will have a measure of freedom because the network wants to provide them with the ability to build and design an interface that they believe will best appeal to their demographic target. “We didn’t want to restrict our users, our content and our advertisers to CBS.com alone. Through the Interactive Audience Network, we are taking our effective reach from 13 percent of the Web to about 90 percent,” he said.

Matthew Glotzer, svp Fox Digital Media, said the joint venture between Fox and NBC is designed to create a strong distribution footprint via deals with MSN, Yahoo and others. “The online video consumption experience is good, today. We are beyond a proof-of-concept stage now.” But refinements in the model will come, he said. “The destination site is a good canvas on which we can innovate around the online video consumption experience,” said Glotzer. The Hulu site will offer more than Fox and NBC programming.

CBS officials say their Interactive Audience Network has been widely embraced by advertisers. Over the four-month period, online revenue generation has reached several million dollars, said Jo Ann Ross, president of sales for the CBS Television Network, who declined to be more specific. The advertising is sold as a package for on-air and online content, but the Interactive Audience Network has its own separate bucket of money, explained Ross.

And the ad model is still a work in progress. Discussions on the table include different ways to target genres and different types of ad executions, such as utilizing overlay technology, said Ken Lagana, head of sales for CBS.com, CBS Audience Network and CBSNews.com.

Several major marketers contacted for this story support the network’s strategy shift. “We know that consumer habits are changing,” said Bob Dees, purchasing group manager at Procter & Gamble’s North America corporate marketing and media division. “To just think about our communications plan on television is the wrong way to go. And online video is playing a more important role in how we communicate to the consumer.”

But digital distribution also raises concerns, said James Kiernan, vp, digital director at Mediavest. “The risk for advertisers is that as content gets distributed in a wider fashion, it’s much harder to have stewardship over these entities that you don’t have any control over,” he said. “A challenge for advertisers will be how can we link our advertising to specific programming regardless of how it gets distributed?”

But the online distribution partners say the network strategy shift makes sense. “We’re already in the business of providing content for free to consumers through an ad-supported model. If we’re not involved in these distribution agreements, we’re leaving money on the table,” said Fred McIntyre, svp, AOL Video.

The money McIntyre refers to is in the revenue share model that has been created with the CBS deal. The network takes the lion’s share, with online partners getting approximately 10 percent of the cut. But, the exact percentage is based on how many eyeballs they bring into their sites.

The Hulu model is slightly different, said Zander Lurie, svp, strategy and development for CNET, a partner in both CBS’ Interactive Network and the joint venture between Fox and NBC. “The big difference between our agreement with CBS and NBC is, for CBS it’s an import model, where we get paid for distributing their content. For the NBC-Fox deal, we also get paid for exporting our shows to them, where we get the majority of the revenue share,” he said. But both models serve the same purpose, he said. “We can enhance the user experience, and help to increase the value of the network franchises, and we can get paid to do so.”