It's D-Day for Internet Strategy

Folio: The Magazine for Magazine Management, May, 2000

"It's decision-day for publishers," says Reed Phillips, managing partner, DeSilva & Phillips, media investment bankers. "They have to figure out what to do with their Internet sites." A publisher has three options, he says: (1) Sell it. Phillips paraphrases Ted Turner when he says, "If publishers don't know what they are going to do now, they should get the hell out of the way." (2) Do a strategic alliance with a dot.com company that does have an Internet strategy.

(3) Try to build your site on your own. "This is problematic for most publishers," says Phillips, "because a lot of dot.coms have access to huge amounts of money and they can be very aggressive in their plans. Typically, a dot.com will go out and raise $5 million on the first round and $20 million on the second round. That's a lot of money to work with. Publishers are trying to do Internet development out of cashflow. So unless you are a very large company with unlimited resources, it's hard." Of all the publishing companies Phillips talks to, only 10 percent are trying to do it themselves, 60 percent are looking for a partner, and 30 percent are thinking of selling so they won't have to figure out a dot.com strategy. But, Phillips adds, there is some wavering: "One t hing that holds publishers back from selling is the feeling that if they do some Internet-related things themselves, they can get a much higher valuation and lots more money."