InformationWeek
Defining The Business Value Of Technology
September 27, 1999
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Web Is Big News At Media Companies
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By Dawme Shand
irtually every segment of the media and entertainment industry is being transformed by the Internet. The Web, in fact, has become a huge determinant of the success or failure of media ventures and their marketplace offerings. So it's no surprise that the development of online projects is among the top IT priorities at these companies.
Media and entertainment companies in the InformationWeek 500, including news-paper and magazine publishers, broadcasters, book printers, and advertising agencies, are constantly looking for new ways to use the Internet to complement their existing products, open new opportunities, and counter competition.
Partly because of all of the activity on the Web, IT departments at many media companies are being forced to refocus from what has been largely a back-office support role to one of finding new business opportunities for their companies. "Our priorities have changed from reacting to immediate needs to thinking about the future and being poised to deliver new ideas that the client may not anticipate," says David MacBlane, worldwide CIO at Ogilvy & Mather, an international advertising and branding agency in New York. Where just a few years ago IT generally reacted to business' requests, MacBlane says, it now takes the lead in demonstrating how technology can create new sources of revenue.
William Godfrey, VP and chief technology officer at Dow Jones & Co. in New York, says the product development process at media companies must incorporate the IT group. "Product development is at the intersection of many disciplines,'' Godfrey says. "My goal is to promote a tighter integration of IT and business."
IT leaders and departments at media companies realize their pivotal role in defining new technology-based products. The ability to personalize Web content for increasingly narrow customer segments looks to be a major revenue source. Because content can be manipulated digitally, IT groups play a more important role in defining how content can be repackaged for the Internet.
The Web is affecting different types of media companies in various ways and is reshaping the competitive landscape. For example, ESPN, the sports cable channel with the most popular sports Web site, launched a print magazine; in response, Sports Illustrated magazine teamed with Cable News Network to create a rival Web site. Media companies are eager to gain a foothold in all the major distribution channels.
For print news and entertainment providers, the Internet offers a chance to reach a larger readership base and build stronger relationships with readers, and at the same time is a potential threat to classified-ad sales and a source of competing specialized content. For book publishers, it's a place to distribute more books or encounter hundreds of potential new competitors. Broadcasters can create ways to reach viewers via the Web, but also struggle to hold on to viewers who have found another on-screen entertainment choice. For ad agencies, the Internet offers opportunity through ads on the Web and threats to the revenue base because of its impact on print advertising.
Forward-looking media companies are developing new ways to leverage the Web. Gannett Co. has created an auction site on its Web page, and by combining classified ads from its franchise of 89 newspapers is providing an additional sales channel for its customers. R.R. Donnelley & Sons Co., a company best known for its array of bulk printing and distribution services, has created an E-commerce arm and developed an online community of interest in which its magazine and book affiliates can publish their home and gardening content.
Web Complements
Dow Jones, publisher of The Wall Street Journal, has successfully used the Internet to complement and extend its business. Building on its archive of news reporting and analysis, Dow Jones has launched several successful Web sites. The most widely known is The Wall Street Journal Interactive Edition, which has more than 300,000 paying subscribers. Dow Jones' electronic-publishing group recently launched two portal sites, one that organizes all Dow Jones content by industries and another that's aimed at small businesses.
Although the Internet has garnered a lot of focus, IT departments at many of the media companies are also spending much time building internal networking and computing infrastructures to make it easier to share knowledge and foster new business growth. Times Mirror Co. in Los Angeles, publisher of the Los Angeles Times and other newspapers and magazines, has successfully launched a shared services environment in which all of its subsidiaries have access to back-office human-resources, payroll, and accounting systems. With these systems and a new asynchronous transfer mode fiber-optic network in place, the company is poised to handle anticipated business growth.
"We look forward now to turning our attention to the business of the businesses," says Judy Kallet, CIO at the Los Angeles Times. Kallet says efforts are under way to make information from enterprisewide systems available through the company's intranet, called The Loop. 
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