ITNorthWest Voice

This is a blog for all the technology entrepreneurs based in the North West of Ireland - musings about our business, companies, interests, trends and any other random thing that hits us.

Friday, January 06, 2006

VCs rushing into TV market

This caught my attention. "All the Irish broadsheets cover the launch of a new national television station, which is due to begin broadcasting in the Spring. The Irish Examiner reports that over EUR14 million has been invested in Channel 6 by a consortium of investors which includes ACT Venture Capital and Delta Partners. The station is aimed at the 15-to-35 age group and is expected to compete directly with RTE2 and TV3." I'm still trying to work out why VC's would want to invest in Broadcast - All current investment activities are in the Online space (most 15-35 year olds spend the majority of there time online or using mobile services) Look at events such as CES, read John Battelle's Search book, etc.

6 Comments:

Blogger Julian Ellison said...

Why invest in Broadcast? Because it is so easy to construct the business model. You can forecast, reasonably accurately, the reach and number of eyeballs watching the channel.

You multiple this by the number of advertising slots, and then multiply this again by the standard advertising rates for this demographic, and hey presto you have a revenue forecast. Throw in some revenues from premium rate telephony and text messaging and you're done.

All you need to do then is promise to keep programme production and acquisition costs below a certain figure per hour, and you have your gross profit forecasts.

Whereas in the game we are in, all is much more fluid and uncertain. Which is why it is much, much more interesting :)

1/06/2006 02:06:00 PM  
Anonymous keith bohanna said...

My reply not much different - there is a tremendous value associated with traditional media because of the viewing figures. Leading to strong advertising revenues.

And those revenues are stable - at least for a 10 year span and that is enough for VC's!

I deinfitely enjoy the internet space - however I have a mate involved in local media in Ireland and his pitch to investors was short and almost immediately successful :-)

keith

1/06/2006 04:51:00 PM  
Blogger Fergus Burns said...

Great comments

I know broadcast media is a great business - but my observation was on VC activity (in an Irish context).

The overall global trend is that the advertising dollar is shifting online - Google/Yahoo and recent Microsoft moves are proof of that pudding.

Would those VCs invest in an online business? Would they invest in an Irish online service ? Would they have invested in Google in 1999 ? Would they have invested in Skype in 2002 ?

Do we have a problem in the Irish investment market with online ?

1/07/2006 01:33:00 AM  
Blogger Julian Ellison said...

Investors, with prior experience of on-line, i.e Americans, understand the need to prospect for revenues. The business model emerges through trial and error provided the core offering is compelling enough for people to become attracted to it.

This is a darned scarey approach for European VCs, who are really more like banks than Venturers.

Of course, if one of us actually makes it, this might change -- but by then we won't need their cash anyway. We can set up our own Irish tech fund and leave them to build even more overpriced hotels and office blocks.

1/07/2006 11:11:00 AM  
Anonymous Piaras Kelly said...

For the exact same reason as City Channel's successful fundraising - cheap advertising. TV as an advertising medium is very attractive to Irish businesses, despite the fact that an Adwords strategy would be far more attractive.

1/07/2006 04:37:00 PM  
Anonymous keith bohanna said...

Part of your original question was "I'm still trying to work out why VC's would want to invest in Broadcast" and that was certainly answered!

"Would those VCs invest in an online business? Would they invest in an Irish online service ? Would they have invested in Google in 1999 ? Would they have invested in Skype in 2002?"

Damned if I would/will begin to start answering those :-) Although there has been investment in the last couple of years in Irish web services and online businesses.

If I was a VC and offered the choice today - I would probably go with a traditional media offering as there is a relatively certain payback over a defined period. And that is how I would keep my investors happy.

Investors for online etc should possibly come from the angel/individual investor pool.

keith

1/07/2006 05:43:00 PM  

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