Gamble needs others to go all in

But history little help to venture's potential partners

YouTube, meet TheirTube.

Fox and the peacock are bringing together some of the most popular Web sites to establish a prime alternative to the Internet's hottest destination. But ganging up on Google is a gutsy gambit, according to observers, raising questions about how this will all play out.

Chief among them is whether other conglomerates will join the Newco fold. The likes of the Walt Disney Co. and Sony Corp. could step off the sidelines as potential equity partners or content contributors. News Corp. president and CEO Peter Chernin said discussions with fellow conglomerates are ongoing, but so far the likely suspects are staying mum.

In a research note Thursday, media analyst Jessica Reif Cohen of Merrill Lynch said, "We expect other content providers will provide content, but the past travails of media joint ventures may limit the number of equity partners."

Hollywood history is littered with examples of multipartnered programming efforts gone wrong, from the decade-old TELE-TV effort that brought together CAA and leading phone companies to the download service Movielink, last seen commanding scant market share and sale rumors despite the collaboration of such studios as Paramount Pictures and MGM.

"The exclusive nature of the relationship could also be a roadblock, as equity partners will continue to distribute content on their own sites but will use the new site as their exclusive vehicle for third-party distribution," Reif Cohen wrote.

An executive at one conglomerate not involved in the joint venture predicted that fellow media giants might not be quick to join the effort because they would have to cede control over content. "You are at the mercy of this consortium as to how you want to distribute elsewhere," the exec said. "There's no flexibility."

A few media powerhouses did release statements with their reactions to the joint venture. "A new online video distribution platform that respects copyrights is a welcome addition to the industry," Viacom said. "The venture supports our view that upholding the rights of content creators is the only logical and legitimate path. …"

CBS Corp. also chimed in. "CBS continues to pursue its interactive distribution strategy by partnering on an open, nonexclusive basis with best-in-class, next-generation platforms in order to reach and learn about its audience and get paid for its content worldwide."

The real winners that could emerge here are the participating portals, according to Gigi Johnson, principal of media consulting firm Maremel Ventures and a lecturer at UCLA's Anderson Entertainment and Media Management Institute.

"This allows them to parlay their existing footprint and really put their defenses up against Google," she said. "They've already got good CPMs; this allows them to be part of a relatively big-dollar game going forward."

John Hunt of media-buying agency OMD believes that the new venture was inevitable. "Sooner or later, it was going to happen," he said. "The big media companies couldn't just sit back and watch YouTube use their content."

A senior executive at one of the partnering media companies worried that the new site could fail to find traction online because ventures that draw buzz tend to be startups that come from out of nowhere. "The Internet likes a success story that starts in someone's garage," he said on the condition of anonymity.

The timing of Thursday's announcement — following Viacom's move last week to file a $1 billion lawsuit against Google — was coincidental, Chernin said. "I think it would be a huge mistake to assume this is a reaction to the Viacom lawsuit," he said during a conference call with reporters.

While the venture is being perceived as a counterpunch to Google's YouTube, Chernin indicated that Google could conceivably participate in the venture in some fashion.

"We're willing to sit down and talk to anybody," he said. "In fact, we have had a conversation with (Google CEO) Eric Schmidt this morning, and they are considering this."

NBC Universal president and CEO Jeff Zucker held out the prospect that the tensions between media companies and Google could be eased.

"We've had discussions with them to make sure any pirated content should not exist there, and we are continuing those discussions," he said. "Hopefully we'll come to a resolution satisfactory to both companies. We look forward to bringing that to a resolution shortly before this launches."

A spokeswoman for YouTube issued a statement in response to the new venture.

"We value our relationships with NBC and Fox as they continue to upload content to promote their signature programming and look forward to working with them in the future."

Alex Woodson in New York and Nellie Andreeva in Los Angeles contributed to this report.